← Glossary · Indicator
RSI (Relative Strength Index)
Momentum oscillator on a 0–100 scale that flags overbought (>70) or oversold (<30) conditions.
What it is
The Relative Strength Index, developed by J. Welles Wilder in 1978, measures the speed and magnitude of recent price changes. It plots a single line bounded between 0 and 100. Conventional reading: above 70 = overbought (asset has rallied fast, mean-reversion likely); below 30 = oversold (selling exhausted, bounce likely). Crypto traders typically use a 14-period RSI on the 1-hour or 4-hour chart. The most powerful RSI signal is divergence — when price makes a new high but RSI doesn't, the rally is losing internal strength.
Example
BTC rips from $60K to $76K in three days. RSI on the 4h chart reaches 82. An RSI-aware trader either takes partial profit or tightens stops, anticipating a 5–10% pullback that typically follows extreme readings.
How Indikora uses RSI
Indikora's Quant agent uses 14-period RSI as one of 23 inputs to its Final Verdict, and flags hidden + regular divergences automatically on every chart.
Related terms
- MACD (Moving Average Convergence Divergence) — Trend-momentum indicator: difference between 12 and 26-period EMAs, plotted with a 9-period signal line.
- Stochastic Oscillator — Momentum oscillator comparing the latest close to its high-low range over N periods.
- Divergence (RSI / MACD) — When price makes a new extreme but the indicator doesn't — a leading signal of trend exhaustion or reversal.
Strategy guides that cover this
- How to Trade with RSI — A Complete Strategy Guide
Three reliable RSI setups, when each works, and the mistakes that turn RSI from edge into noise - MACD Divergence Strategy — The Complete Playbook
How to spot, validate, and trade MACD divergence with high-conviction confluence checks