Relative Strength Index (RSI )is a technical analysis momentum indicator used by traders /investors to identify extent of price movements and general trend in financial securities. 

Relative Strength Index - Content Image

A Tradingview chart with RSI Indicator applied!

The RSI indicator on the price chart usually has a single line (RSI line).
RSI value ranges between 0 and 100 at any given point of time and these are calculated  in two steps using average price gains and losses  over a default 14 day time period.

How to interpret RSI ? 
If RSI value >  70 then the security is considered overbought and oversold if  RSI < 30.

How to confirm trends using RSI ? 
Security’s price is considered to be in uptrend if its RSI value is between 40-90 and downtrends if it is ranging between 10-60.

How to derive Trading signals from RSI  Indicator ? 
Traders derive RSI signals based on RSI values, divergence and also Bullish / Bearish swing rejection.

Divergence happens when there is a difference between the RSI line and the price action of the security.This is considered as a very strong signal. 

Sentiment  Vs RSI value mapping

Bullish signal  The RSI line is crossing below or hovering around the 30-40 RSI range.
Bearish signal The RSI line is crossing above 70 or hovering around the 70-90 range.

Sentiment Vs Divergence mapping

Bullish signal  Price of the security makes lower lows and RSI  makes higher lows.
Bearish signal Price of the security makes higher lows and RSI  makes lower lows

Practice RSI – Beginn

Practice RSI – Beginner

Practice RSI – Beginner

Practice RSI – Beginner