Traders often rely on RSI to measure the momentum behind a stocks price. It helps identify potential reversal points.
RSI values range from 0 to 100. Traditionally:
- Above 70 = potential downward correction
- Below 30 = possible upward bounce
For example, if Tesla stock shows an RSI of 28, traders may interpret it as oversold and prepare for a possible recovery. Conversely, occidental petroleum investment guide an RSI above 75 could signal that the asset is overbought and might retrace soon.
Many traders combine RSI with:
- Support and resistance levels
- Moving averages
- Volume analysis
Using RSI on different timeframes (e.g., 15min vs. daily) can yield short-term vs. long-term perspectives. Platforms like MetaTrader, TradingView, or Webull allow you to adjust the RSI length (default is 14 periods) to fit your trading style.
Beware of false signals RSI isnt foolproof. Always confirm with other indicators or price action.
Even beginners can quickly grasp RSI, learning RSI can add precision to your analysis.
