The Relative Strength Index (RSI) is one of the principal momentum indicators used when analyzing charts.
RSI works best when it's compared to short-term moving-average (MA) crossovers. Using a 10-day MA with a 25-day MA, you may find that the crossovers indicating a shift in direction will occur very close to the times when the RSI is either in the 30/70 or 20/80 range; the times when it is showing either distinct overbought or oversold readings. Simply put, the RSI, sooner than almost anything else, indicates an upcoming reversal of a trend, either up or down.
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