Vladimir RibakovOwner, Chief Trader at Home Trader Club (Former Traders Academy Club), Owner, Chief Trader at Home Trader Club (Former Traders Academy Club) · Owner, Chief Trader at Home Trader Club (Former Traders Academy Club)

📈 Understanding RSI 20: Oversold Territory & Potential Trend Reversal Signals 📉 #trading #forex #fyp

15 Jul 2024 · 1 min

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In this short tutorial, Vladimir Ribakov explains his personal method for using the Relative Strength Index (RSI) to identify extreme oversold market conditions. While the standard oversold level is 30, he prefers a stricter threshold of 20, arguing it captures more extreme price weakness. When the RSI drops below 20, he treats it as the first indication that the market may be ready for a retrace or a full trend reversal. He illustrates the approach with two forex pair examples: Euro/Aussie, where a sharp decline from ~1.67 to below 1.65 saw the RSI cross under 20 and the price bounce sharply upward; and New Zealand/Yen, where a bearish trend also produced RSI‑below‑20 readings that preceded strong upside rebounds. The video’s purpose is to teach traders a practical, more precise RSI setting for spotting high‑probability reversal opportunities.

Chapters

Here is how I use the RSI to find oversold conditions. By default, RSI oversold is below 30. I use the 20 as it's much more accurate to find these very extreme levels. So when the RSI crosses below the 20, this is your first sign of potential oversold condition. From there, a trend change is very possible. Sometimes it would be a retrace, sometimes a full trend change. Here are a couple of examples. Euro Aussie after a massive drop to the downside all the way from around 167 to below 165, the RSI reaches oversold conditions with crossing below 20 and making a massive bounce to the upside. New Zealand Yen twice on the same bearish trend reaching oversold conditions with RSI crossing below 20 and creating a massive bounce to the upside.