Interpretation of signals or results - Buy or Sell Estimation

The Buy or Sell Estimation A.I indicator from Smart Trading Indicators has been designed to provide a clearer view of potential entry and exit points in the market. Its operation combines two classic technical analysis approaches (RSI and Bollinger Bands) into a unique format, enhancing the identification of overbought or oversold situations.

Below, we delve into the interpretation of its signals:

Modified RSI Indicator:

What is it? The RSI (Relative Strength Index) is an oscillator that measures the speed and change of price movements. In this indicator, it has been modified to offer a more precise interpretation in combination with other elements.
Signals: The RSI value fluctuates between 0 and 100, with traditionally 70 and 30 being the levels indicating overbought and oversold conditions, respectively. However, in our variant, the indicator looks for crosses with dynamic bands, which will be described below, to signal potential entries or exits.

Dynamic Bands based on Modified Bollinger and RSI:

What are they? Traditional Bollinger Bands consist of a moving average and two standard deviations that create an upper and lower band. In this case, the bands have been modified to interact with our adapted RSI, resulting in what we call "dynamic bands."
Signals: When the modified RSI crosses above the dynamic upper band, it indicates a strong likelihood of overbought conditions and, therefore, a selling opportunity. Similarly, when the RSI crosses below the lower band, it suggests oversold conditions and a potential buying opportunity.

Interpreting Color Bars:

Green Bar: A green bar appears when there is a convergence of buy signals. This means that the modified RSI indicates an oversold condition while simultaneously crossing a relevant dynamic band. It is a signal that prices may start to rise.
Red Bar: The red bar is generated when the RSI shows an overbought condition and crosses down a dynamic band. It is a signal of a possible bearish reversal or a pause in the uptrend.

Additional Considerations:

False Signals: Like any indicator, there are occasions when signals may not result in significant price movements. Therefore, it is crucial to use the indicator in combination with other analysis methods or systems to filter signals and improve accuracy.
Market Context: Signals are more reliable in markets with moderate volatility. In highly volatile markets, the RSI can remain in overbought or oversold levels for extended periods.

To maximize the effectiveness of the Buy or Sell Estimation A.I, it is recommended that traders practice on a demo account and become familiar with its signals and peculiarities before using it in live trading.

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Last updated 1 year ago

Modified RSI Indicator:

What is it? The RSI (Relative Strength Index) is an oscillator that measures the speed and change of price movements. In this indicator, it has been modified to offer a more precise interpretation in combination with other elements.

Signals: The RSI value fluctuates between 0 and 100, with traditionally 70 and 30 being the levels indicating overbought and oversold conditions, respectively. However, in our variant, the indicator looks for crosses with dynamic bands, which will be described below, to signal potential entries or exits.

Dynamic Bands based on Modified Bollinger and RSI:

What are they? Traditional Bollinger Bands consist of a moving average and two standard deviations that create an upper and lower band. In this case, the bands have been modified to interact with our adapted RSI, resulting in what we call "dynamic bands."

Signals: When the modified RSI crosses above the dynamic upper band, it indicates a strong likelihood of overbought conditions and, therefore, a selling opportunity. Similarly, when the RSI crosses below the lower band, it suggests oversold conditions and a potential buying opportunity.

Interpreting Color Bars:

Green Bar: A green bar appears when there is a convergence of buy signals. This means that the modified RSI indicates an oversold condition while simultaneously crossing a relevant dynamic band. It is a signal that prices may start to rise.

Red Bar: The red bar is generated when the RSI shows an overbought condition and crosses down a dynamic band. It is a signal of a possible bearish reversal or a pause in the uptrend.

Additional Considerations:

False Signals: Like any indicator, there are occasions when signals may not result in significant price movements. Therefore, it is crucial to use the indicator in combination with other analysis methods or systems to filter signals and improve accuracy.

Market Context: Signals are more reliable in markets with moderate volatility. In highly volatile markets, the RSI can remain in overbought or oversold levels for extended periods.