Relative Strength (Not RSI)

For a serious trader Relative Strength (Not RSI) is a very important component. A careful study of RS will tell you your are on which stage.

There are 4 stages in a stock's life Stage:
Stage 1 - This is the stage of consolidation, usually happens at bottom after a fall.
Stage 2 - This when stock breaks out from Stage 1 and price moves away from stage 1.

Stage 3 - This is again a consolidation phase but this will be at top or after stage 2.
Stage 4 - This is the break down of stage 3 and price falls quickly .

As a Trader we usually enter at Stage 2 to go long or Stage 4 to either book out our stock or to short a stock.

Relative Strength or RS is a stocks performance against bench mark index. This tool is freely available in TV community. Which is a great tool to take or avoid a trade.

In this case RS is in red or falling which means the stock is under performing bench mark index NIFTY500. Now look the chart, stock is in consolidation after a up move. So RS is advising us against any further buy a stock is underperforming even though moved up and rightly so the eventual broken down.