RSI Indicator: Complete Trading Guide

Key Takeaways

• 1RSI >70 = overbought (potential sell), <30 = oversold (potential buy)—but trend can stay extended.
• 2Divergence: Price makes new high/low but RSI doesn't = reversal warning; strongest signal.
• 350 line: Above = bullish bias, below = bearish; use for trend direction confirmation.
• 4Use with structure: RSI oversold + support = strong long; RSI overbought + resistance = strong short.
• 5Period setting: 14 (standard), 7 (faster/noisier), 21 (slower/smoother)—adjust to timeframe.
• 6Avoid trading RSI signals against strong trend; wait for divergence or range-bound conditions.