The Relative Strength Index compares recent gains to recent losses and scores the result from 0 to 100. High readings mean buying has been relentless lately; low readings mean selling has been.
Crucially, RSI measures the speed of the recent move — not its direction, and not what happens next.
Convention calls RSI above 70 "overbought" and below 30 "oversold". In a range-bound stock those extremes often precede snap-backs toward the middle of the range.
But the labels mislead beginners into fighting trends. The strongest stocks pin RSI above 70 for weeks precisely because they are strong — selling something just for being overbought means exiting the best movers early, and shorting them is how accounts get hurt.
Treat RSI as context. An extended reading far above 70 says the move is stretched and chasing here carries snap-back risk. Divergence — price making a new high while RSI makes a lower high — says momentum is quietly cooling.
Neither is a trade by itself. Combine RSI with levels, volume, and the catalyst, and it becomes a useful temperature gauge instead of a false signal machine.
Fourteen bars is the default on nearly every platform, applied to any timeframe — 14 days on a daily chart, 14 minutes on a one-minute chart.
They answer different questions. VWAP shows who is in control of today's session; RSI shows how stretched the recent move is. Many traders use both.
Price making a new extreme while RSI fails to — often an early sign the move's momentum is fading, though it can persist a long time before mattering.
TheScanner watches premarket gappers, unusual volume, whale flow, insider buying, and news catalysts across the whole market — and logs every alert so the track record is verifiable. Research tool, not investment advice.
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