RSI – The indicator that quickly “reads” market psychology for traders
If you have ever:
Bought at the top ❌
Sold at the bottom ❌
Felt confused not knowing whether the market is overbought or oversold
-> Then RSI is what you need to understand first.
Summary of the 3 most important ways to use RSI:
1. Overbought – Oversold
RSI < 30 → Market is oversold → Be careful to Sell, look for Buy
RSI > 70 → Market is overbought → Be careful to Buy, look for Sell
It’s not that just hitting 30/70 means to enter an order immediately – RSI is a warning, not a get-rich-quick button.
2. Divergence – Early reversal signal
Price makes a lower low but RSI makes a higher low → Bullish signal
Price makes a higher high but RSI makes a lower high → Bearish signal
-> This is when “smart money” starts to act, while the majority still hasn’t realized.
3. Trendline Breakout on RSI
Draw trendline directly on RSI
RSI breaks trend → Price usually moves ahead or together
-> Very effective for confirming entry – exit in trends.
Remember:
RSI should not be used alone.
Combining with market structure – support and resistance – capital management will unleash its full power.
Anyone trading gold, forex without understanding RSI → consider it as lacking an important eye to see the market.
How are you using RSI?
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