RSI
Technical Analysis
What it means
Relative Strength Index: a 0-100 line that measures how fast and how much price has moved recently. Above 70 suggests overbought; below 30 oversold.
Example
A stock that has risen for 10 straight days may show RSI of 78, hinting it is overbought and due for a pullback. A crash that drops RSI to 22 may signal a bounce is near.
Mistake beginners make
Beginners short anything over 70 and buy anything under 30. In a strong trend, RSI can stay overbought for weeks; using it alone against the trend is a losing game.
Related terms
- MACD — Moving Average Convergence Divergence: an indicator that subtracts a slow EMA from a fast …
- Bollinger Bands — Two lines plotted two standard deviations above and below a 20-period moving average. They…