RSI
The Relative Strength Index helps traders spot whether a stock is becoming too strong or too weak relative to its recent price moves.
Start the lessonIntroduction
Momentum, but in a number
The Relative Strength Index (RSI) is a momentum indicator. It measures how strong recent upward or downward movements have been compared with earlier price action.
The short answer
RSI helps answer: Is the market getting too strong or too weak in recent trading? It usually ranges from 0 to 100.
Reading the scale
70 and 30 are big reference points
Above 70
Often considered overbought, meaning prices may have moved too far too fast.
Around 50
Often seen as neutral or balanced momentum.
Below 30
Often considered oversold, meaning prices may have dropped too far too quickly.
Simple example
Check the indicator level
The current RSI is 72, which usually means the market feels overbought.
Common mistakes
Momentum is useful, but it can mislead
Assuming overbought means buy
A stock can stay overbought for a long time during a strong trend.
Assuming oversold means sell
A stock can stay oversold while the downtrend continues.
Using RSI without trend context
The price trend still matters a lot.
Ignoring risk management
A momentum reading is not a guarantee of direction or timing.
Key points
What to remember
- RSI stands for Relative Strength Index.
- It usually ranges from 0 to 100.
- Above 70 often suggests overbought momentum.
- Below 30 often suggests oversold momentum.
- RSI is a momentum indicator, not a prediction tool.
- Trend direction and risk control still matter a lot.
This lesson is for education only, not personalized financial or investment advice. RSI is a chart tool used to understand recent momentum more clearly.
Quiz