Using RSI For Overbought And Oversold Signals
A 1-minute lesson from the MarketPro academy, one of 24 in trading strategies.
The Relative Strength Index (RSI) is a momentum oscillator that measures the speed and size of recent price changes, producing a reading between 0 and 100. It is commonly used to gauge whether a market has moved further than its recent pace would suggest is sustainable.
The Relative Strength Index (RSI) is a momentum oscillator that measures the speed and size of recent price changes, producing a reading between 0 and 100. It is commonly used to gauge whether a market has moved further than its recent pace would suggest is sustainable.
Typical Interpretation
- Readings above roughly 70 are often described as overbought, suggesting upward momentum may be stretched
- Readings below roughly 30 are often described as oversold, suggesting downward momentum may be stretched
- Some traders also watch for divergence, where price makes a new high or low that RSI does not confirm
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Lesson 5 of 24 in Trading strategies
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