RSI Indicator — Spotting Overbought and Oversold
RSI runs from 0 to 100. Above 70 suggests overbought, below 30 oversold — but in a strong trend it can stay stretched for a long time. How to use it well.
What RSI is
RSI (Relative Strength Index) measures the strength of recent price momentum on a 0–100 scale:
- Above 70: overbought — price has risen sharply and may pull back.
- Below 30: oversold — price has fallen sharply and may bounce.
- Between 30 and 70: neutral.
You do not need to calculate it — every charting tool does. What matters is reading it in context.
How to use it
Divergence. When price makes a new high but RSI does not, that bearish divergence warns momentum is fading. When price makes a new low but RSI does not, that bullish divergence hints at a possible turn up.
Reversal timing. Rather than acting the instant RSI crosses 70 or 30, some traders wait for it to cross back (dropping under 70, or rising over 30) as confirmation.
The big caveat
In a strong trend, RSI can stay stretched for a long time. In a powerful uptrend it may sit at 80–90 for weeks — selling every time it reads "overbought" would be a losing game. Likewise, in a strong downtrend it can stay near 20 and keep falling. RSI is context, not a standalone trigger.
Combine with a moving average
- RSI below 30 and price above the 200-period average (uptrend) is a more reliable buy setup.
- RSI above 70 and price below the 200-period average (downtrend) is a more reliable sell setup.
- RSI below 30 in a clear downtrend is best ignored.
fastbot lets you set price alerts at the levels that matter, so you can act on a confirmed setup instead of a single reading. Set up alerts.