RSI, or Relative Strength Index, shows how stretched a price move is. It doesn’t tell you what an asset is worth. It tells you how intense recent buying or selling has been.
When RSI runs high, price may be overheated. When it drops low, selling pressure may be exhausted. RSI helps put momentum into context.
RSI helps investors judge short-term risk. Extreme readings often appear near turning points or pauses in trends.
It’s most useful alongside trend and market sentiment. In strong trends, RSI can stay elevated or depressed longer than expected, which is why context matters.
RSI is calculated as:
- RSI formula: 100 − (100 ÷ (1 + average gains ÷ average losses))
- Scale ranges from 0 to 100
- RSI above ~70 often signals overbought conditions
- RSI below ~30 often signals oversold conditions
Levels indicate pressure, not guaranteed reversals.
A common mistake is treating RSI signals as automatic buy or sell triggers. RSI highlights conditions, not outcomes.
Another error is using RSI without trend context. In strong trends, RSI can remain extreme while price keeps moving, increasing risk for premature trades.
On Stoxcraft, RSI appears on stock pages within the technical analysis section.
It also feeds into internal Stoxcraft Scores as part of broader momentum and trend assessments, and is covered in Academy content explaining technical indicators, momentum, and price behavior.
