How To Use Stochastic RSI In Technical Analysis (With Chart Example)

Disclosure: Your support helps keep running! We earn a referral fee for some brokers & services we list on this page. Learn more...

Last Updated on

The Stochastic RSI combines two very popular technical analysis indicators, Stochastics and the Relative Strength Index (RSI). Whereas Stochastics and RSI are based off of price, Stochastic RSI derives its values from the Relative Strength Index (RSI); it is basically the Stochastic indicator applied to the RSI indicator.

As will be shown below in the chart of the S&P 500 E-mini Futures contract, the Stochastic RSI attempts to give buy and sell signals and overbought and oversold readings:

Comparison of Stochastic RSI and Relative Strength Index

In the chart above of the E-mini S&P 500 Futures contract, the RSI indicator spent most of its time between overbought (70) and oversold (30), giving no potential buy or sell signals. However, the Stochastic RSI used the RSI indicator to uncover potential buy and sell signals.

How a trader might interpret the potential buy and sell signals of the Stochastic RSI is given next in the chart of the S&P 500 E-mini:

Stochastic RSI buy and sell signals

Stochastic RSI Potential Buy Signal

A trader might consider buying when the Stochastic RSI crosses above the Oversold Line (20).

Stochastic RSI Potential Sell Signal

A trader might consider selling when the Stochastic RSI crosses below the Overbought Line (80).

To read more about the Stochastic indicator and the RSI indicator, click the links below:

The information above is for informational and entertainment purposes only and does not constitute trading advice or a solicitation to buy or sell any stock, option, future, commodity, or forex product. Past performance is not necessarily an indication of future performance. Trading is inherently risky. shall not be liable for any special or consequential damages that result from the use of or the inability to use, the materials and information provided by this site. See full disclaimer.

[[{{Country}} Welcome]]
[[{{Country}} Welcome]]