Trading binary options requires some sort of indication as to what direction the market movement is going to attend and when it might happen. There will be certainly many different types of these to present themselves in the future, however one of the most vital forms of these indicators would be the Relative Strength Index, or commonly abbreviated as RSI.

RSI – Relative Strength Index

The RSI can be found across all the major trading platforms the software programs supported, located under such categories as the momentum indicators or the oscillators. The default period of this indictor has been set to 14 periods, which takes the minimum of 14 chart candles to interpret the data enclosed by this collaboration in the future. Future results will be interpreted as based on the concurring levels of 30 and 70, accordingly to the situation that is being offered by the online brokers.

As the interpretation would differ mainly on the level of stage, it is vital to note that 30 will be representing the oversold area, as 70 is going to present the overbought state. As far as binary options appear on the scene, the concurrent levels will also apply to which type of options should be considered right now. Level 30 will make for good conditions for acquiring call options, as the level 70 keeps the field open for put options.

Trading on lower time frames poses also considerable advantage, for the RSI allows to do just that with a range or triangle identity that makes such objects apply to higher time frames and can be utilized to the same strategy in an opposite environment. The RSI can be utilized on every chart form, making it highly practical when it comes for a universal indication.