Also called Relative strength index
RSI
A 0 to 100 gauge of how one-sided recent moves have been. Conventionally below 30 is oversold and above 70 overbought, though a strong trend can hold an extreme for weeks.
Updated 2026-09-03
The relative strength index compares the size of recent gains to the size of recent losses and expresses the result on a scale from 0 to 100. Above 70 is conventionally called overbought and below 30 oversold.
The conventional reading is where most people go wrong with it. A high RSI does not mean a stock is due to fall. It means the stock has been going up strongly, which in a genuine trend is exactly what you would expect and exactly what you want. Strong trends routinely hold an RSI above 70 for weeks, and selling into that because a threshold was crossed is selling the best part of the move.
Where it is actually useful
As a filter rather than a trigger. Entering a long position when RSI is already at 85 means paying for a move that has largely happened, so a trend strategy may sensibly withhold a confidence bonus there without refusing the trade outright. Divergence is the other use: price making a new high while RSI does not is momentum weakening under a price that has not yet noticed.
See also
- Mean reversion — The tendency of a stretched price to drift back toward its own average. Angie measures how often that actually happened for a name rather than assuming it will.
- Signal confidence — The weighted entry score a bar must clear before the strategy opens a trade, built from trend and momentum agreement. It says nothing about whether a stock is cheap.
- Z-score — How many standard deviations today's price sits from its recent average. Two sigma below means a move this far down happened on roughly one day in forty.
Educational content, not investment advice. Angie explains how a valuation is built so you can judge it yourself. What you do with that is your call.
