What is RSI (Relative Strength Index)?
RSI explained on a 0–100 scale—overbought, oversold, divergence, and how to use RSI with structure instead of blind signals.
The Relative Strength Index (RSI) is a momentum oscillator that measures how fast and how far price has moved over a lookback period—typically 14 bars—on a 0–100 scale. Traders use RSI to gauge whether momentum is stretched (overbought or oversold), fading, or diverging from price.
RSI is a glossary staple, not a standalone buy or sell signal. Context—trend, levels, and invalidation—matters more than any single reading. For full setups and examples, see RSI trading explained. For crypto-specific context, see RSI for crypto.
RSI scale: 0 to 100
| RSI zone | Common label | What it suggests |
|---|---|---|
| 70–100 | Overbought | Upside momentum may be stretched; not always a sell |
| 30–0 | Oversold | Downside momentum may be stretched; not always a buy |
| 50 | Neutral | Balanced momentum between gains and losses |
| 40–60 | Pullback zone | Often healthy in an uptrend when price holds structure |
RSI is bounded, so you can compare readings across crypto, stocks, and FX—but the same number means different things in a trend vs. a range.
Key RSI terms
| Term | Definition |
|---|---|
| Overbought | RSI above ~70; price may have rallied quickly relative to recent losses |
| Oversold | RSI below ~30; price may have fallen quickly relative to recent gains |
| Divergence | Price makes a new high/low but RSI does not confirm—momentum warning |
| Lookback period | Bars used in the calculation; 14 is the default on most platforms |
In strong trends, RSI can stay overbought or oversold for extended periods. Treat extremes as context, not automatic reversals.
How RSI fits a research workflow
- Check trend first — is the market ranging or trending? See market regime
- Pair with levels — RSI at 28 at support differs from RSI at 28 mid-range. See support and resistance
- Look for confluence — structure + RSI beats RSI alone. See confluence in trading
- Define invalidation — where does the thesis break if you act? See invalidation points
ChartGuru includes RSI in scored reads alongside bias, confidence, and key levels—analysis only, not auto-execution.
Common mistakes
- Buying every oversold print in a downtrend
- Selling every overbought print in a strong uptrend
- Ignoring timeframe — 14-period RSI on 5m vs. daily tells different stories
- Treating RSI as a signal instead of one input in a plan
FAQ
What does RSI measure?
RSI compares average gains to average losses over a set period, normalized to a 0–100 scale to show momentum strength and stretch.
What is overbought and oversold in RSI?
Overbought usually means RSI above 70; oversold below 30. These labels describe stretched momentum, not guaranteed reversal points.
Is RSI 14 the only setting?
No. Shorter periods (7–9) react faster; longer (21–25) smooth noise. Match the setting to your timeframe and strategy.
Can I trade RSI alone?
Most disciplined traders do not. RSI works best with trend, key levels, and a clear invalidation level.
Learn More
Analyze a market free on ChartGuru
Analyze free on ChartGuru — no card required →
See RSI alongside bias, confidence, key levels, and invalidation across crypto, stocks, FX, indices, and metals.
Next steps
- Explore AI chart analysis tools and guides
- Asset workflows: Crypto · Forex · Stocks · Gold · Indices
This article is for educational and informational purposes only. Nothing here constitutes personalized investment advice or a recommendation to buy or sell any financial instrument. All trading involves risk of loss.