RSI
RSI (Relative Strength Index) is an oscillator from 0 to 100 that compares the strength of recent price gains and losses. Above 70 is conventionally overbought, below 30 oversold.
How it works
RSI was introduced by Welles Wilder in 1978. It takes the average gain and average loss over a period, usually 14 candles, and maps their ratio onto a 0 to 100 scale: RSI = 100 − 100 / (1 + RS), where RS is the average gain divided by the average loss.
A reading above 70 says price has risen fast and the move may slow down. Below 30 says it has fallen fast. The 50 level is often used as a dividing line: above it buyers are in control, below it sellers.
Traders also look for divergences. If price makes a new high but RSI does not, momentum is fading. That is not a reversal signal on its own, but a reason to watch levels and market structure more closely.
BTC is up 15% in a week and the daily RSI(14) reads 78. That is overbought, but in a strong trend RSI can stay above 70 for weeks while price keeps climbing.
ETH makes a lower low, from 2,400 to 2,300, but the 4-hour RSI rises from 25 to 34 instead of making a new low. That is a bullish divergence: the sell-off is losing strength. A trader waits for a bounce off support before buying.
The most common mistake is selling just because RSI is above 70, or buying just because it is below 30. In a strong trend the indicator stays overbought or oversold for a long time, and counter-trend trades keep getting stopped out. Use RSI as confirmation together with the trend and key levels, not as a standalone entry button.
Questions and answers
What is RSI in simple terms?
It is an indicator that shows how strongly and quickly price has been rising or falling lately. On a 0 to 100 scale, high means buyers are stretched and low means sellers are.
What are the best RSI settings?
The standard is a 14-candle period with levels at 70 and 30. A shorter period makes it more sensitive but gives more false signals.
What does RSI above 70 mean?
Price has risen fast and the market is considered overbought. It does not mean price must fall: in a strong trend, RSI can stay above 70 for a long time.
Related terms
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Updated: 2026-10-19