RSI is the most popular oscillator in trading. It is simple, and it is most often misread: "above 70, sell" only works in a range.

What RSI shows

RSI (Relative Strength Index) compares the average gain with the average loss over the last N candles, usually 14. The result sits on a 0–100 scale. The higher the value, the more buying has dominated recently.

The 70 and 30 levels

The textbook reading: above 70 is overbought, below 30 is oversold. But in a strong trend RSI can stay above 70 for weeks, and selling "because it is overbought" against the trend is one of the most common mistakes. It is more useful to watch RSI around 50: in an uptrend pullbacks usually end in the 40–50 zone, in a downtrend bounces fade around 50–60.

Divergences

RSI's strongest signal is a disagreement with price. Price makes a higher high while RSI does not — a bearish divergence, the rally is running on less strength. Price makes a lower low while RSI holds higher — a bullish divergence. More in our guide to divergence.

How to use it

RSI should not be the only reason for a trade. It works well as a filter: look for longs at a large order book wall only when RSI is leaving oversold, or skip longs while a bearish divergence is building on a higher time frame.

In our terminal RSI opens under the chart in one click, next to the order book heatmap, so you can see whether real money backs the signal.

Settings

The standard period of 14 suits most time frames. A short period (7–9) gives more signals and more noise, a long one (21–25) fewer but later. Change settings only after testing on history, not by eye.