RSI Four

RSI Example Four

The Relative Strength Index (RSI) provides signals and tell investors to buy when securities or currencies are oversold and sell when they are overbought. When the RSI is above 70 the stock is oversold or below 30, the stock is overbought. This indicates a reversal of the trend in financial markets. A reversal often occurs after a bullish or bearish divergence. When the stock breaks through a new high and RSI makes a lower, the bearish divergence occurs and a bullish divergence occurs when a stock makes a new low, while RSI sets a higher low.