RSI (relative strength index)
A momentum gauge from 0 to 100. It shows stretched conditions and divergences.
What it is
The RSI (14) compares recent gains to recent losses on a 0–100 scale. Above 70 is usually called overbought, below 30 oversold. In strong trends it can stay in those zones for a long time, so these are warnings, not automatic reversals.
Divergence is when price makes a new extreme but RSI does not: it shows momentum fading.
How to use it
- Use RSI as context, not as a standalone entry.
- In ranges, fade extremes with a level and a trigger.
- In trends, look for RSI to hold 40–50 on pullbacks (uptrend).
- Watch for divergence at key levels.
Overbought can stay overbought. Combine it with structure.
Common mistakes
- Shorting just because RSI is above 70 in a strong uptrend.
- Using one RSI setting for every market.
- Ignoring the timeframe.
Practise it in TradeDesk X
RSI is one of the independent checks in the Scanner’s 20 confluences, and the chart lower pane supports RSI alongside volume and MACD.
Related lessons
📊
MACD
Two moving averages and a histogram: a view of momentum and trend change.
📊Moving averages (SMA and EMA)
Smoothed price. They show trend direction and act as dynamic support and resistance.
Educational content only. Nothing here is financial advice or a recommendation to buy or sell anything. Trading leveraged products can lose more than you deposit. Practise with paper trading first and never risk money you cannot afford to lose.