What the Indicator Shows
RSI is displayed on a scale from 0% to 100%. Readings above 70% are sometimes treated as a guideline for "overbought" conditions, and readings below 30% for "oversold" conditions. Because it is calculated from the ratio of price gains to losses, it is used to gauge which direction market momentum is leaning toward.
How to Read It, and What to Watch Out For
RSI levels are only one guideline for gauging overheated conditions — figures such as 70% or 30% cannot be treated as absolute trading signals. During a strong, sustained trend, the price can continue moving while RSI stays pinned at overbought or oversold levels, so it is common to make an overall judgment alongside other indicators.
