Lesson 3 of 7 · Indicators
RSI
RSI measures momentum, not price level.
The RSI compares average gains to average losses over 14 periods. Output runs from 0 to 100. Above 70 is called overbought, below 30 oversold. It tells you whether buyers or sellers have dominated recent sessions, not how far price has moved.
Momentum in its own panel.
The RSI (14) panel below price shows the momentum reading across the same time span. Watch for the line entering or leaving extreme zones, and for divergence between price direction and RSI direction.
Overbought does not mean sell.
In a strong uptrend, RSI can stay above 70 for weeks. Fading every reading above 70 in a bull market costs money. The real signal is divergence: price makes a new high, RSI does not. That gap between price and momentum is where reversals often develop.
A stock is in a clear uptrend. RSI has stayed above 70 for two weeks. What's the most accurate read?
Show the answer
B. Buyers have dominated recent sessions. Sustained high RSI reflects consistent buying pressure. It becomes a reversal signal only when divergence appears or the trend structure breaks.