Benefits of RSI
1. Identifying Overbought and Oversold Conditions: Provides a tool for traders to see that the trend is deviating when an asset is overbought (RSI above 70) or oversold (RSI below 30).
2. Trend Confirmation: This applies the idea that the movement of RSI is more confirmation of trend strength where it is above 50 for an uptrend and below 50 for a downtrend and this aids traders in making informed decisions.
3. Generating Buy and Sell Signals: Gives the trading rules for successful trade decisions according to too-much-bought and too-much-sold market conditions.
4. Divergence Detection: Traders are given an alert when price movements start deviating from RSI movements which may indicate a change of trend.
5. Versatility and Adaptability: This can be utilized as a part of diverse financial toolkits and timeframes, customizing trading approaches and strategies for different traders.