Technical Analysis

RSI: Reading Momentum and Overbought/Oversold Levels

The RSI measures momentum and helps identify potential reversals — divergence is its most powerful signal.

Key rules

  1. RSI above 70 = overbought; below 30 = oversold (contextual)
  2. In strong trends, RSI extremes can persist — don't fade blindly
  3. Bullish divergence (price LL, RSI HL) signals potential reversal
  4. RSI centreline (50) separates bullish from bearish regimes
  5. Combine with structure and price action, not in isolation

The RSI oscillates between 0 and 100. Above 70 = traditionally overbought; below 30 = oversold. In strong trends, RSI extremes can persist — context matters more than absolute levels.

RSI divergence is most powerful: bullish divergence occurs when price makes a lower low but RSI makes a higher low, signalling weakening bearish momentum.

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