RSI: Understanding Momentum and Overbought Conditions

The Relative Strength Index, or RSI, measures the magnitude of recent price gains relative to recent losses.

It's commonly used to identify potential overbought and oversold conditions.

RSI above 70 is often described as overbought, while below 30 is often described as oversold.

But an overbought market can continue rising, and an oversold market can keep falling.

I look at RSI alongside trend direction, support and resistance, and price behavior.

Never assume that an extreme reading guarantees an immediate reversal.