RSI indicator

The Relative Strength Index (RSI) is a technical momentum indicator measuring the speed and change of price movements, scaled from 0 to 100 to identify overbought (>70) or oversold (<30) conditions. Developed by J. Welles Wilder Jr., it helps traders spot potential trend reversals or corrections.Imagine a stock, XYZ, is trending upwards.Overbought Signal: The price increases sharply, and the RSI rises to 75. This suggests the stock is overbought, indicating a high probability of a price dip or reversal in the near future.Oversold Signal: The stock crashes, and the RSI falls to 25. This suggests the stock is oversold, potentially creating a buying opportunity as the price may rebound.Divergence: If the stock makes a new high, but the RSI makes a lower high, this bearish divergence indicates weakening momentum and a potential trend reversal.