Hi!

Due to the many questions about the parameters and using this indicator I will give some info and few examples. First, you must remember that parameters always depend on strategy that you want to trade. I always recommend to try different settings and choose best for yourself.

I'll make a small comparison, so I will start from another indicator, which is "Volume-weighted RSI Pointer" (also called Money Flow Index) and can be interpreted similar to RSI. The big difference from RSI is, of course, volume. Because volume is added to the combination, the Volume-weighted RSI act a little differently than RSI. Theories says that volume leads prices. RSI is a momentum oscillator that already leads prices. Incorporating volume can increase this lead time. Volume-weighted RSI can be used to identify overbought or oversold levels and price extremes. Typically, for default period of volume-weighted RSI equal to 14, values above 80 is considered overbought and below 20 is considered oversold. A move above 90 is truly overbought and a move below 10 is truly oversold. Of course, as always (also with RSI) there can become overbought (>80) and prices can continue higher when the uptrend is strong or there can be oversold (<20) and prices can continue lower when the downtrend is strong.

You must take each signal as a hint and you must have some technique for confirmation. Price action is always good to take last decision and trigger the trade. That is always true independtly from which indicator you use or strategy. So, I recommend to try volume-weighted RSI as a filter with period 7 and 14. When period is 7, best low level is ~10 (automatically high level=90), when period is 14, low level is ~20 (automatically high level=80). Below is screen for period=7 and level=10. If just wait each time for price action confirmation (always take a look to supply and demand zones and support and resistance lines, too) that is profitable, e.g. take a look on chart and try to find engulfing pattern after each signal below. This engulfing pattern can be also compound from two candles which engulf previous candle from opposite direction. As I said, everything depends on strategy.

Now, I will take the same chart and I delete arrows and leave only vertical lines from volume-weighted RSI Pointer. I'm adding arrows from "RSI Pointer" with settings - RSI Period 7, level=20. And, as you can see on the last vertical line, we've got confirmation from both indicators, because there is confirmation from volume-weighted RSI (vertical line on chart) and also from RSI (group of red arrows). There was also a lot of "room to the left" (supply and demand). After big movement UP we had big movement DOWN - it was a great opportunity to SELL. As we can see, it was confirmed by first red candle engulfing 2 previous green candles on top:

Best regards and good luck!!!