What Is the RSI Indicator? How to Read RSI as a Beginner
RSI is one of the most popular indicators: it shows how strongly and how fast the price has moved recently. Here's how to read it and why it often fools beginners.
What it is
RSI (Relative Strength Index) is an oscillator that ranges from 0 to 100. It compares the strength of gains and losses over the last N candles, usually 14. The higher the value, the stronger the buyers have been.
| Value | What it's called | What it means |
|---|---|---|
| Above 70 | Overbought | The price rose quickly |
| 30–70 | Neutral zone | No strong bias |
| Below 30 | Oversold | The price fell quickly |
The main trap
"RSI is above 70, so I sell" is a common mistake. In a strong trend, RSI can stay in overbought territory for weeks while the price keeps rising. Overbought means "the move is strong," not "it's about to reverse."
How it's used
- With the trend. In an uptrend, an RSI pullback to 40–50 can be a place to look for a buy; more about trends in the article trend trading.
- Divergence. The price makes a new high, but RSI doesn't: momentum is fading. That's a reason to tighten your stop, not a signal to go short.
- Together with levels. RSI confirms chart analysis but doesn't replace it.
Any indicator is just a supporting tool. Every trade needs a stop-loss. More about indicators in the lesson indicators without the obsession.
Aspiro Trade offers signals on 45 assets, and each one comes with an entry, a take-profit, and a stop-loss. The first month is free.
- RSI shows the strength of a move on a scale from 0 to 100.
- Overbought is not a sell signal in a strong trend.
- Use RSI together with the trend and key levels, and always use a stop-loss.
Frequently Asked Questions
What RSI period should I use?
The standard is 14. Most traders use it, so there's no point changing it without a reason.
What timeframe should I use RSI on?
The same one you trade on, plus a higher one for context. On minute charts, RSI produces a lot of noise.
Does RSI work in crypto?
It works the same way as in other markets: it shows the strength of a move. But crypto tends to have long trends, so overbought signals are especially misleading there.
Free Aspiro Academy
26 lessons on investing and trading from scratch: videos, practice in the Aspiro apps, quizzes and a certificate. Lesson texts are open without sign-up.