How to Use RSI (Relative Strength Index) Relative Strength Index, or RSI, is a popular indicator developed by a technical analyst named J. Welles Wilder, that help traders evaluate the strength of the current market. RSI is similar to Stochastic in that it identifies overbought and oversold conditions in the market. It is also scaled from 0 to 100. Typically, readings of 30 or lower indicate oversold market conditions and an increase in the possibility of price strengthening (going up). Some traders interpret that an oversold currency pair is an indication that the falling trend is likely to reverse, which means it’s an opportunity to buy. Readings of 70 or higher indicate overbought conditions and an increase in the possibility of price weakening (going down). Some traders interpret that an overbought currency pair is an indication that the rising trend is likely to reverse, which means it’s an opportunity to sell.
