📊 RSI Explained: A Simple Tool That Reveals Market Momentum

The Relative Strength Index (RSI), created by J. Welles Wilder, is one of the most widely used momentum indicators in trading. It helps traders understand how strong or weak a price move really is, not just where the price is going.

🔍 What RSI Measures RSI tracks the speed and magnitude of recent price changes to evaluate momentum. It moves on a scale from 0 to 100, making it easy to spot extreme market conditions.

📈 Key RSI Levels

Above 60 → Market strength is increasing and momentum is bullish

Below 40 → Weak momentum and growing bearish pressure

70+ (Extended strength) → Possible overbought conditions

30− (Extended weakness) → Possible oversold conditions

⚠️ How Traders Use RSI

To identify potential reversals at extreme levels

To confirm trend strength, not just entry points

To spot divergences, when price and momentum disagree

To avoid chasing moves when momentum is already stretched

💡 Important Insight RSI works best when combined with trend direction, support and resistance, and volume. It’s not a standalone signal, but a powerful confirmation tool when used correctly.

Mastering RSI isn’t about predicting tops or bottoms. It’s about understanding momentum behavior and aligning trades with market strength.

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