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RSI (Relative Strength)

Understand the oversold and overbought indicator, and what the app does with it.

The essentials

The RSI (Relative Strength Index) is an oscillator bounded between 0 and 100 that measures the speed and magnitude of recent price changes.

  • Below 30: the asset is considered oversold (potential for a bullish bounce).
  • Above 70: overbought (potential for a bearish pullback).
  • Between 30 and 70: neutral zone, no strong signal.
In the app, the RSI used is the 14-period RSI, and the confluence signal fires exactly at the 30 and 70 thresholds.
An oversold RSI does not guarantee a bounce: an asset can stay oversold for a long time. Never make a decision based on this signal alone.
Going further: divergences

A divergence appears when price makes a new low while the RSI makes a higher low (bullish divergence), or the reverse. It signals a possible exhaustion of the trend.

Expert: period and limits in a trend

The 14-period default is a standard; shortening it makes the RSI more reactive but noisier. In a strong trend, the RSI can stay pinned in an extreme zone for a long time, making the 30/70 thresholds misleading.