Figure: Example of the application of RSI and support level to identify bullish signals

To increase the effectiveness of the technical signals, we will buy near support level while RSI is in oversold condition. Take note that the trend must first be determined in order to select the appropriate values for the overbought and oversold levels. Figure 5 illustrates the application of this simple strategy on SGX. As SGX is in an uptrend, the overbought and oversold levels are set to 80 and 40 respectively. Two excellent bullish technical signals were generated in July and December 2006 when RSI was in oversold region while the price was near the support levels.