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StockCram is not a broker-dealer, investment adviser, or financial institution. All content is for educational and informational purposes only and should not be construed as personalized investment advice. Consult a qualified financial professional before making investment decisions. Past performance does not guarantee future results.Simple Definition
A momentum indicator (0-100) that measures how fast a stock is rising or falling. Above 70 is "overbought," below 30 is "oversold."
Why It Matters
RSI is one of the most popular and accessible technical indicators. It helps identify when a stock may have moved too far, too fast — and could be due for a reversal. An RSI above 70 suggests the stock may be overbought (potentially overextended), while below 30 suggests oversold (potentially a bounce). Many traders use RSI alongside price patterns for entry and exit timing.
Key Points
- Scale: 0-100. Above 70 = overbought (may be due for pullback). Below 30 = oversold (may be due for bounce)
- Standard setting uses 14 periods; shorter periods (7) are more sensitive, longer (21) are smoother
- RSI works best in ranging markets — in strong trends, a stock can stay overbought/oversold for extended periods
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Common Questions
A momentum indicator (0-100) that measures how fast a stock is rising or falling. Above 70 is "overbought," below 30 is "oversold." RSI is one of the most popular and accessible technical indicators. It helps identify when a stock may have moved too far, too fast — and could be due for a reversal.
RSI is one of the most popular and accessible technical indicators. It helps identify when a stock may have moved too far, too fast — and could be due for a reversal. An RSI above 70 suggests the stock may be overbought (potentially overextended), while below 30 suggests oversold (potentially a bounce). Many traders use RSI alongside price patterns for entry and exit timing.
Scale: 0-100. Above 70 = overbought (may be due for pullback). Below 30 = oversold (may be due for bounce)
Standard setting uses 14 periods; shorter periods (7) are more sensitive, longer (21) are smoother
RSI works best in ranging markets — in strong trends, a stock can stay overbought/oversold for extended periods