The RSI Strategy Analysis Template creates a chart displaying a trading strategy that goes long when the market begins moving from oversold towards overbought and then sells when the price momentum begins to weaken. The Relative Strength Indicator (RSI) is used to determine the start of an uptrend, while the Price Low indicator is used to determine weakening price momentum.

The Relative Strength Index (RSI) measures price momentum. Mathematically, the Relative Strength Index ranges between values of 0 and 100. The closer the index is to 100, the stronger the indication of an overbought market. The closer the index is to 0, the stronger the indication of an oversold market. In general, index values above 50 indicate a possible uptrend, while index values below 50 indicate a possible downtrend.

The RSI Trading Strategy enters a long position using a market order when the Relative Strength Index (RSI) crosses above 30. The trading strategy exits a long position with a trailing stop. Each bar, a new ‘trailing’ sell stop order is generated with a stop price set to the lowest price over the last 3 bars. When the price goes below the ‘trailing’ stop price, the long position is sold.

The trading strategy is setup initially with the following parameters:

Long Entry ‘ CrossAbove(RSI(Close,10),30)

Long Trailing Stop ‘ PriceLow (Low, 3)

When a new chart based on the template is created, NeuroShell Trader asks if you want to backtest the trading strategy. If you answer yes, the length of the RSI, the RSI threshold value, and the number of bars for the low price trailing stop will be optimized for each chart page in your chart.