🧠 What is RSI?
The Relative Strength Index (RSI) is a popular momentum indicator used in technical analysis to measure the speed and strength of price movements.
👉 Helps traders identify:
- Overbought markets 🔺
- Oversold markets 🔻
- Potential trend reversals 🔄
📐 RSI Formula
RSI=100−1+RS100
Where:
- RS = Average Gain ÷ Average Loss
- Default RSI period = 14
📊 RSI Range
- 0 → 100
Important Levels
- 🔺 Above 70 = Overbought
→ Price may fall - 🔻 Below 30 = Oversold
→ Price may rise - ⚖️ Around 50 = Neutral trend
📈 How Traders Use RSI
✅ Buy Signal
- RSI crosses above 30
- Indicates bullish momentum returning 🚀
❌ Sell Signal
- RSI falls below 70
- Indicates weakening bullish strength 📉
🔄 RSI Divergence
Bullish Divergence 📈
- Price makes lower low
- RSI makes higher low
👉 Possible upward reversal
Bearish Divergence 📉
- Price makes higher high
- RSI makes lower high
👉 Possible downward reversal
🎯 Trading Strategy
- ✅ Buy near RSI 30 + support zone
- ❌ Sell near RSI 70 + resistance zone
- 🔐 Combine with:
- Trendlines
- Candlestick patterns
- Moving averages
- Volume confirmation
⚠️ Important Tips
✔ RSI works best in trending markets
✔ Avoid using RSI alone
✔ Strong trends can keep RSI overbought/oversold for long periods
🧠 Key Takeaway
👉 RSI = Momentum Strength Meter
👉 Helps identify overbought, oversold & reversals