RSI overbought or oversold

RSI stands for Relative Strength Index.

The most commonly used RSI is calculated over 14 days of prices. It is a mathematical formula that compares the average gains and losses.

It serves as a trigger for many trading bots and is one of the basic tools for decision-making when a trader is considering a transaction.

When the RSI is above 70%, it is considered to be overbought, which increases the likelihood that traders will sell to take profits (selling pressure). When it is below 30%, it is considered to be oversold, which increases the likelihood that traders will view it as a good deal (buying pressure).

More experienced traders check for RSI divergences to see when the momentum of the movement is running out of steam, which increases the likelihood that the price will reverse direction. RSI divergence is calculated by observing the peaks of the price curve and comparing them with the peaks of the RSI curve—the low peaks when the price is falling and the high peaks when the price is rising. This comparison is usually done by looking at the chart on TradingView.