A popular method of analyzing the RSI is to look for a divergence in which the security is making a new high, but the RSI is failing to surpass its previous high.
This divergence is an indication of an impending reversal. When the Relative Strength Index then turns down and falls below its most recent trough, it is said to have completed a "failure swing".
The failure swing is considered a confirmation of the impending reversal.
Relative Strength Index
The following signals of Relative Strength Index are used in chart analyzing:
This is the main formula of Relative Strength Index calculation:
RSI = 100 - (100 / (1 + U / D))
U — average number of positive price changes;
D — average number of negative price changes.
Description of the technical indicator
The full description of the Relative Strength Index is available in the Technical analysis: Relative Strength Index section
Translated from Russian by MetaQuotes Software Corp.
Original code: https://www.mql5.com/ru/code/7677
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