Trading & Technical Analysis

What is the RSI indicator and how does it work?

The RSI (Relative Strength Index) is a momentum indicator that measures the speed and size of recent price changes on a scale of 0 to 100, helping traders gauge whether an asset has moved sharply in one direction. Readings above 70 are often described as overbought and below 30 as oversold, though these are signals of momentum, not instructions. For example, an RSI of 80 suggests strong recent buying that may or may not continue. RSI can stay in extreme zones for long periods, so it is a descriptive tool rather than a reliable predictor of reversals.

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