What the RSI is and how to read it
The RSI (Relative Strength Index) measures how stretched a stock is: whether it has risen too fast or been punished too much.
A scale from 0 to 100
The RSI moves between 0 and 100. The two classic thresholds:
- above 70 — overbought: the stock has run a lot, a pause or correction is possible;
- below 30 — oversold: it has been sold heavily, a bounce is possible.
It's not a traffic light
A high RSI doesn't mean "sell now": in a strong trend it can stay above 70 for a long time. Read it in the context of the trend.
Divergences
The most interesting signal: if the price makes a new high but the RSI doesn't, that's a divergence warning of possible weakening.
Frequently asked questions
What does the RSI measure?
The strength and speed of price moves, on a 0–100 scale, to see if a stock is overbought or oversold.
What does RSI above 70 mean?
Overbought: the stock has risen fast, a pause or correction is possible. It's not a sell order.
What is an RSI divergence?
When price and RSI go in different directions (e.g. price up, RSI down): it warns of possible trend weakening.
Analyse charts automatically
The free app TradePattern spots 84 patterns and indicator signals, filters them by reliability and lets you paper-trade risk-free.
Discover TradePattern →Free to try · no subscription