Loading...
Loading...
Is the market overbought or oversold? RSI tells you.
RSI (Relative Strength Index) is a momentum oscillator that measures the speed and magnitude of recent price changes. It was developed by J. Welles Wilder in 1978 and is now one of the most widely used indicators in trading — visible on every Zerodha Kite and TradingView chart.
RSI moves on a scale of 0 to 100. When it is very high, the stock has risen too fast and may be due for a pullback (overbought). When it is very low, the stock has fallen too fast and may be due for a bounce (oversold). This makes RSI incredibly useful for timing entries and exits.
The stock has rallied too fast. Momentum may be exhausted. Not a sell signal by itself — in a strong bull run, RSI can stay above 70 for weeks. But it is a warning to be cautious.
RSI above 50 confirms upward momentum. The trend is up. Many traders only buy when RSI is in this zone — confirming they are trading with the trend.
RSI below 50 confirms downward momentum. The trend is down. Selling or staying in cash is generally safer in this zone.
The stock has fallen too fast. May be due for a bounce. A great zone to watch for reversal signals — but never buy just because RSI is low. Wait for a candle pattern confirmation.
Divergence is when price and RSI move in opposite directions. This is one of the most powerful — and most misunderstood — signals in technical analysis.
Price makes a lower low, but RSI makes a higher low. Sellers are losing strength even though price is falling. Signals a potential trend reversal upward.
Price makes a higher high, but RSI makes a lower high. Buyers are losing strength even though price is rising. Signals a potential trend reversal downward.
In a strong bull run (like Nifty in 2023–2024), RSI can stay above 70 for weeks without any meaningful correction. Never short a stock just because RSI is 75. Always wait for confirmation — a break below a key support or a bearish candlestick pattern.