What It Is
RSI (Relative Strength Index) is a momentum oscillator created by J. Welles Wilder in 1978. It measures the speed and magnitude of recent price changes on a scale of 0 to 100. The default period is 14.
Key insight: RSI doesn't measure price direction — it measures momentum. A rising RSI means bullish momentum is accelerating. A falling RSI means momentum is weakening. This distinction is critical: price can continue rising while RSI falls, which creates divergence signals.
RSI is bounded between 0 and 100, which makes it comparable across different assets and timeframes. The standard interpretation uses 70 as overbought and 30 as oversold, though these zones shift in trending markets.
Getting Started with RSI
Start with the daily timeframe and the default 14-period setting. Learn to recognize when RSI is confirming price action (healthy trend) vs. when it's diverging (potential reversal).
The most powerful RSI signal for beginners is divergence at key support or resistance. If price hits support and RSI shows bullish divergence, that's a high-probability long setup. Always combine RSI with price structure.
This indicator works best when combined with price action analysis. Never trade indicators alone - always confirm with the chart.
Continue through technical indicators
Compare this reference with related structures and readings before applying it to a live chart.