RSI "Normal" mode
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Newbie here, so forgive my assumptions, if they are incorrect. Regarding RSI. Considering the market goes in cycles:
1. Accumulation (ranging sideways)
2. Breakout (up/down trend with volume increase)
3. Distribution (peaking)
4. Downtrend (exhaustion)
Based on this assumption, if an instrument is overbought on the RSI, I should expect to eventually see prices falling back to somewhere around 50 or below. Right?
The reason I asked is because I analysed an FX pair and my supposition was that it was in the 3rd. phase. All indicators said price was going to fall from high and overbought place, and I placed a buy order.
But so far, it simply stays there, and the candles are all small now, so activity seems low. It looks like it is beginning to range sideways, but RSI remains overbought.
Am I projecting, and this is normal. Or should the price actually fall to a lower range, eventually?
I am just curious on what the experts think.