Introduction
The RSI (Relative Strength Index) is one of the most powerful momentum indicators used in technical analysis. It helps traders identify potential reversals and trend strength.
What is RSI Indicator?
RSI measures the speed and change of price movements on a scale of 0 to 100.
RSI Formula & Levels
- Above 70 → Overbought
- Below 30 → Oversold
How to Use RSI in Trading
Overbought & Oversold Signals
- RSI > 70 → Possible reversal down
- RSI < 30 → Possible reversal up
RSI Divergence
When price and RSI move in opposite directions → strong signal.
Chart Image Suggestion
- Image: RSI indicator chart
- Alt Text: RSI indicator showing overbought and oversold levels on stock chart
Common Mistakes with RSI
- Using RSI alone
- Ignoring trend direction
- Overtrading signals