Open AccessTrend identification with the relative strength index (RSI) technical indicator –A conceptual study
Author(s) -
Ashok Kumar Panigrahi,
Kushal Vachhani,
Suman Kalyan Chaudhury
Publication year - 2021
Publication title -
journal of management research and analysis
Language(s) - English
Resource type - Journals
eISSN - 2394-2770
pISSN - 2394-2762
DOI - 10.18231/j.jmra.2021.033
Subject(s) - technical analysis , chart , econometrics , term (time) , investment (military) , momentum (technical analysis) , stock market , index (typography) , stock market index , statistics , stock (firearms) , rate of return , financial economics , stock exchange , economics , actuarial science , mathematics , finance , computer science , engineering , geography , mechanical engineering , physics , context (archaeology) , archaeology , quantum mechanics , politics , world wide web , political science , law
We all must agree that the word "trend" is now the buzzword of the stock market. As a part of investment strategy and analysis, it is always suggested that the investors should keep an eye on medium-term and short-term changes in addition to longer-term (secular) patterns. Traders and investors use the RSI as a momentum indicator. Overbought and oversold situations are indicated by RSI values between 70 and 30. Over the past two decades, several techniques have been developed to analyze NIFTY 50 data for investment purposes. In this paper, we have estimated the returns by looking at the two trends i.e., 50-50 and 60-40. In addition to this, how to trade and back-test our strategy is also explained. Applying these two RSI strategies to the NIFTY 50 chart revealed that 50-50 offers a higher long-term return, while 60-40 provides a superior short-term return. Finally, the strategies' returns F-statistics and P-values were calculated and analyzed to determine their significance level and acceptability.