RSI, explained
RSI, the Relative Strength Index, is the wiggly line in a box under many charts. It squeezes recent price moves into one number from 0 to 100 that says how one-sided the buying or selling has been.
How to read it
- Above 70: often called overbought. Prices have risen hard and fast recently.
- Below 30: often called oversold. Prices have fallen hard and fast recently.
- Around 50: balanced. Neither side has been running away with it.
The usual setting compares the size of up-moves to down-moves over the last 14 candles, which is why you'll see "RSI 14".
The big misunderstanding
"Overbought" sounds like "about to fall". It isn't. In a strong uptrend, RSI can sit above 70 for days while the price keeps climbing. Selling every time RSI crosses 70 is a well-known way for beginners to miss whole rallies, and buying every dip below 30 can mean catching a falling knife.
How people use it sensibly
- As a caution light: a very high RSI says "this move is stretched, don't chase it."
- Together with the trend: an oversold reading in an uptrend means something different from one in a downtrend.
- Alongside, not instead of, a stop-loss and sensible position sizes.
Where you'll see this in Nicholas
The RSI 14 panel sits under the chart on Nicholas's detailed skins, with the 70 and 30 lines marked. Nicholas also uses it as a brake: when a coin is very overbought, it holds off buying instead of chasing the spike. The Academy's "Momentum Gauges" unit covers RSI, MACD and ATR.