The RSI is a line graph depicts a scale of zero to 100. This indicator was developed by J. Welles Wilder. Mostly it is displayed beneath the graph of an asset’s price.
The RSI is a technical indicator that intends to chart historical and current strength or weakness of a stock on the closing prices of the recent selected trading period.
It is used for short term buy and sell signals.It is used to track the overbought and over sold signals of an asset.
It moves between 0 to 100.
Low RSI below 30 generate buy signal.High RSI above 70 generate sell signals.It means an asset is usually considered overbought when the RSI is above 70 and oversold when it is below 30.
Be sure not to confuse RSI and relative strength.
Limitations of the RSI
Since the indicator displays momentum, it can stay overbought or oversold for a long time when an asset has significant momentum in either direction. Therefore, the RSI is most useful in a trading range or with specific time span.