Relative Strength Index (RSI)

What is it?

RSI is a momentum oscillator ranging from 0 to 100. It measures the speed and magnitude of price changes. Below 30 indicates oversold conditions (potential bounce), above 70 indicates overbought (potential pullback). For swing trading, RSI helps time entries by identifying when a stock has moved too far too fast.

Why it matters

RSI is a PRIMARY indicator (weight 1.5) in AIShare's scoring. It catches extreme conditions that often precede reversals — exactly what swing traders need. An oversold RSI combined with bullish EMA alignment is a high-probability setup.

Formula

RSI = 100 − 100 / (1 + RS), where RS = Avg Gain / Avg Loss over N periods

Key parameters

How to use

1. 1RSI below 30 = Oversold — look for buying opportunities if trend supports it
2. 2RSI above 70 = Overbought — consider taking profits or tightening stops
3. 3RSI divergence: price makes new high but RSI doesn't = potential reversal
4. 4RSI 40-60 range = neutral zone — wait for clearer signals
5. 5In strong uptrends, RSI may stay above 40 — use 40 as support instead of 30

Signals (6)

Swing trading tips

• Best buy setups: RSI < 35 + price near EMA 50 + bullish candlestick pattern
• Avoid buying when RSI > 75 even in uptrends — wait for pullback
• RSI divergence on daily chart is a powerful swing trade signal
• Use RSI to time exits: sell partial when RSI > 70 in your swing position

Common mistakes to avoid

• Buying solely because RSI is oversold — always check the trend first
• Shorting at RSI 70 in a strong bull trend — RSI can stay overbought for weeks
• Using RSI on very short timeframes where it generates too many false signals

Video tutorials (3)

• RSI Indicator Explained — Full Trading Guide

  Trading Rush

• RSI Trading Strategy for Swing Trading

  Rayner Teo

• RSI Divergence — How to Spot Reversals

  The Trading Channel

Third-party tutorials — linked for educational reference. AIShare is not affiliated with these creators.

Quick quiz — test your RSI knowledge

5 questions. Pass with 3 out of 5 for a completion badge.

1. 1What does RSI measure?

   ATrading volumeBSpeed and magnitude of price changes (momentum)CMarket capitalisationDDividend yield

2. 2Classic oversold threshold for RSI is…

   AAbove 70BBelow 30CExactly 50DAbove 90

3. 3In a strong uptrend, RSI can stay above 70 for…

   AMinutesBHours at mostCDays or weeks — don't short just because it's 'overbought'DIt cannot go above 70 in an uptrend

4. 4What is RSI divergence?

   ARSI and price moving in opposite directionsBTwo RSI lines crossingCRSI moving above 50DRSI staying flat

5. 5Best RSI buy setup in the prompt's tips combines RSI < 35 with…

   AA random stockBA crashing marketCPrice near EMA 50 + a bullish candlestick patternDThin low-volume conditions

Educational self-assessment only — not a regulated qualification.