Relative Strength Index (RSI)

Relative Strength Index (RSI) trading signal is a technical analysis tool used to measure the strength and momentum of a financial asset's price movement. RSI is calculated by comparing the average gains and losses of an asset over a specified period of time, usually 14 days.

The RSI trading signal ranges from 0 to 100, with readings above 70 indicating an overbought condition and readings below 30 indicating an oversold condition. Traders use RSI trading signals to identify potential buy or sell opportunities.

When the RSI is above 70, it is considered an overbought signal, suggesting that the asset is likely to experience a pullback or correction in price. Conversely, when the RSI is below 30, it is considered an oversold signal, suggesting that the asset is undervalued and may experience a price increase.

Traders may also look for divergences between the RSI and the price of the asset. A bullish divergence occurs when the RSI is making higher lows while the price is making lower lows, indicating a potential reversal. A bearish divergence occurs when the RSI is making lower highs while the price is making higher highs, indicating a potential reversal.

RSI trading signals are used in conjunction with other technical indicators to confirm potential buy or sell opportunities. Understanding the RSI trading signal can help traders make more informed trading decisions and improve their overall trading strategy.