RSI
Momentum on a 0-100 scale
What it is
Relative Strength Index compares the size of recent gains to recent losses over a lookback, usually 14 periods, and plots it from 0 to 100.
What it may suggest
Above 70 is conventionally called overbought and below 30 oversold. Divergence, where price makes a new extreme while RSI does not, is the reading most traders watch.
Where it fails
In a strong trend RSI can sit above 70 for weeks, and selling every overbought reading is a reliable way to fight a trend. It measures momentum, not value.
Also called relative strength index, rsi 14.
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