Overbought is not always 70, matching RSI thresholds to the market regime
25 August 2026, 09:00
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Almost every RSI tutorial repeats the same two numbers: overbought above 70, oversold below 30. They are the default for a reason, and Swissquote's primer on technical indicators lists them as the standard reading on a 14 period RSI. But the same primer adds a nuance that most articles quietly drop, and it is the difference between using RSI well and being chopped up by it. In a rising market the useful thresholds shift up, toward roughly 40 and 90. In a falling market they shift down, so a market is only really oversold near 10 and can be considered overbought as early as 60.
Think about what that means for the trader who uses a fixed 70 line in a strong uptrend. Price is trending hard, RSI climbs above 70 and simply stays there, pinned in the upper zone while price keeps rising. The trader reads 70 as a sell, exits, and watches the move continue without them. RSI did not lie. It was being read with the wrong ruler. In a powerful trend, 70 is not a ceiling. It is just where a healthy trend lives.
The fix is not a better oscillator. It is deciding the regime before you choose the thresholds. First answer one question: is this market trending or ranging, and in which direction. Only then do you pick your levels. In a confirmed uptrend, the interesting event is not RSI reaching 70, it is RSI pulling back toward 40 and holding, because that is where trend pullbacks tend to end. The old oversold line of 30 may never even be touched during a strong advance.
This is exactly where reading momentum on its own falls short and reading it in context pays off. A trend filter tells you which regime you are in. A fast moving average above a slow one across several timeframes says up. A rising ADX says the trend has enough force to respect. Once the regime is established, the RSI thresholds follow from it rather than being stamped on every chart identically.
A concrete habit makes this usable. Before acting on an RSI level, classify the market. If the higher timeframes say uptrend, raise your mental thresholds toward the 40 and 90 pair the book describes, buy pullbacks toward the lower band, and stop treating 70 as an automatic exit. If the market is a genuine range, the classic 70 and 30 come back into their own, because in a range the oscillator really does hand you the turns.
The lesson from the book is small and easy to miss, and it changes everything about how you trade momentum: the thresholds are not fixed, the market regime sets them. Measure the regime first, then read the RSI.
The RSI multi-timeframe dashboard and the trend and ADX dashboards used to classify the regime here are available for free on my MQL5 profile.
