What is RSI?
It is an oscillator that measures the magnitude of recent price movements to identify whether an asset is overbought (high price) or oversold (low price).
RSI Ranges
Scale: Ranges from 0 to 100.
70-100: Overbought zone, possible reversal or bearish correction.
30-0: Oversold zone, possible upward rebound.
50: Midpoint. Indicates balance between buyers and sellers. Overbought and oversold:
It does not always mean an immediate change in the trend. It can remain in these zones for extended periods in strong markets (bullish or bearish).
How to use RSI in Trading
1. Identify overbought and oversold
Strategy: RSI > 70: Consider selling as the price may be overvalued.
RSI < 30: Consider buying as the price could be undervalued.
Warning: Do not trade only with these levels; confirm with other indicators or patterns.
Practical example:
If you spot a bullish divergence, consider entering a long position.
If you spot a bearish divergence, consider entering a short position.
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