// HOW-TO GUIDE
10 min READ
How to Use RSI — The Right Way
The Relative Strength Index (RSI) is the most popular momentum oscillator. But "Overbought" doesn't mean "Sell," and "Oversold" doesn't mean "Buy." This guide teaches you the professional way to use it.
01
Identify Divergence
When price makes a higher high but RSI makes a lower high, momentum is fading. This is the most powerful signal the RSI provides.
02
Use the 50-Level as a Bias
If RSI is above 50, the trend is generally bullish. If below 50, it's bearish. Use this as a simple filter for your trades.
Common Mistakes to Avoid
- /Selling just because RSI is above 70 in a strong uptrend
- /Ignoring the trend context
The Drawdown Way
We use RSI as a confirmation tool, never as a standalone entry signal.
Questions & Answers.
What is the default RSI setting?
The standard setting is 14 periods, which is what we recommend for most strategies.
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