RSI Indicator Explained: How to Read and Use It

RSI, or Relative Strength Index, measures the speed and size of recent price changes on a scale from 0 to 100. It is a momentum indicator, it tells you how strongly price has been moving in one direction recently, not where price will go next.

The standard reading: RSI above 70 is generally considered overbought, and below 30 is considered oversold. In practice this means momentum has been strongly one-sided recently, not that a reversal is guaranteed, a strong trend can keep RSI above 70 for a long stretch without reversing.

A more reliable use of RSI than the raw 70/30 levels is divergence: when price makes a new high but RSI makes a lower high, momentum is quietly weakening even though price still looks strong, and the reverse is true at lows. That mismatch between price and RSI is often more useful than the absolute number.

RSI works best combined with a trend or volatility read rather than alone, an oversold reading in a strong downtrend can stay oversold for a long time. The Tradeskill’s charts include RSI for free on every crypto pair, so you can practice reading overbought/oversold levels and divergence on live and historical data with $20,000 in virtual cash.