#TradingTools101

The Relative Strength Index (RSI) is used by traders to analyze market momentum and make informed decisions about entry and exit points for trades. When trading in a market that is trending upwards, traders typically wait for the indicator to show an overbought condition (reading above 70), then monitor the RSI drop below the 50 level, which may indicate a long-term buying opportunity as the upward trend continues.

In downtrending markets, an RSI reading rising towards 50 after an oversold condition (reading below 30) may be used as a sell signal or to strengthen short positions.