Relative Strength Index (RSI)
A momentum oscillator from 0 to 100. Readings above 70 are often called overbought and below 30 oversold.
In practice
RSI on the 4-hour chart climbs above 70 while price makes a new high, then a lower RSI high forms on the next push. That bearish divergence suggests momentum is fading.
Selling just because RSI is above 70. In strong trends RSI can stay overbought for a long time.
Related terms
Divergence
When price and a momentum indicator disagree, for example price…
MACD
Moving Average Convergence Divergence. It tracks the gap between…
Momentum
The speed and strength of a price move. Fading momentum can warn…
Overbought
When momentum indicators suggest price has risen too far too fast.…
Oversold
When momentum indicators suggest price has fallen too far too…
Stochastic oscillator
A momentum indicator comparing the close with the recent high-low…