RSI (Relative Strength Index) Explained Simply
7/6/2026
RSI measures the SPEED of recent price moves on a 0-100 scale. Wilder introduced it in 1978 with a 14-period setting that is still the default everywhere.
Level by level
Beginner
Above 70 the market has risen unusually fast ('overbought'); below 30 it has fallen unusually fast ('oversold'). That means stretched — not 'must reverse'.
Intermediate
In strong uptrends RSI can sit above 70 for weeks — the classic trap. Use range rules (40-80 in uptrends, 20-60 in downtrends) and treat 50 as the trend's midline.
Advanced
Divergence is the higher-value signal: price makes a new high while RSI makes a lower high (bearish) or the mirror at lows (bullish). Combine with a level and a candle trigger, never alone.
Common mistakes
- Shorting only because RSI is above 70 in a strong uptrend
- Changing the 14 setting until the backtest looks perfect
Practise & tools
_Educational content only — not financial advice. Historical behaviour never guarantees future results._
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