Sirius Lee in his early days was searching about stocks trading and this led him to Zeefreak’s blog where he initially got disappointed because of not being able to see a single stock recommendation. I also stumbled upon the same blog and was not able to appreciate the valuable lessons in the post until I re-read it and studied some more. It was in the blogs earlier that I stumbling upon MACD which was discussed previously, I also came across RSI. RSI stands for relative strength index and among the popular trading indicator. It is presented as a value from 0-100. It measures speed and change of price movements. Skipping the formula for RSI, lifted from Fidelity
In an uptrend or bull market, the RSI tends to remain in the 40 to 90 range with the 40-50 zone acting as support. In a downtrend or bear market the RSI tends to stay between the 10 to 60 range with the 50-60 zone acting as resistance.Lifted from Investopedia
RSI is that values of 70 or above indicate that a security is becoming overbought or overvalued and may be primed for a trend reversal or corrective pullback in price. An RSI reading of 30 or below indicates an oversold or undervalued condition.David of Trading 212 mentioned about RSI being used since 1970's and supporting it's a well established indicator; the textbook value for RSI is 14-day period but he sets it at 10 day period. There is a still a lot more to RSI which will be discussed in another post: Divergences Again, Ricardo Alvaro teaches us how to setup RSI on Investegram chart. MACD and RSI are both indicators that measure momentum in a market. However, Investopedia warns
because they measure different factors, they sometimes give contrary indications
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