What RSI can and cannot tell you

RSI is usually shown on a scale from 0 to 100. A commonly used setting looks back 14 periods, but the period and chart interval matter: 14 daily bars and 14 five-minute bars describe different histories.

Use it to ask whether recent upward or downward moves have been relatively strong. Do not use it alone to decide that an asset is cheap, expensive, or about to reverse.

Many charts label readings above 70 as "overbought" and below 30 as "oversold." These labels describe the indicator’s recent range, not a promise that price must fall or rise.

In a persistent trend, RSI can remain elevated or depressed for longer than expected. A threshold is more useful as a prompt to inspect price, volume, news, and the larger trend than as a stand-alone entry or exit rule.

When you study an RSI reading, keep a record of the date and time, chart interval, source of the price data, and what would make your interpretation wrong. This makes it possible to learn from the decision later instead of remembering only the outcome.

For a company share, separate technical observations from information in filings, earnings releases, and material news. A price indicator does not replace research on the underlying business or your risk tolerance.