RSI

RSI is used in five distinct operational contexts: 1) OVERBOUGHT/OVERSOLD: The classic reading suggests that values above 70 indicate overbought (possible bearish reversal) and values below 30 oversold (possible bullish reversal). Warning: in a strong uptrend, RSI can stay above 70 for a long time — this signals trend strength, not necessarily reversal. Wilder himself suggested raising the thresholds to 80/20 in strongly trending markets. 2) CLASSIC DIVERGENCES: A bearish divergence forms when price makes a new high but RSI makes a lower high — momentum is fading. Bullish divergence is the opposite. These are considered among the most reliable signals of imminent reversal, especially on 4H and Daily timeframes. 3) HIDDEN DIVERGENCE: Bullish hidden divergence forms when price makes a higher low but RSI makes a lower low — it signals trend continuation, not reversal. Widely used by ICT traders. 4) CENTERLINE CROSS (50 line): A cross above 50 indicates that average gains exceed average losses: bullish bias. A cross below 50 indicates bearish bias. On a weekly timeframe, this cross is a highly reliable long-term signal. 5) FAILURE SWING: A lesser-known but very effective signal. Bullish Failure Swing: RSI below 30, bounces above 30, pulls back but does NOT break the previous low, then breaks the previous high. It's a pure bullish reversal signal, independent of price. Practical tips: on high TFs (Daily/Weekly) RSI 14 is the best default. On intraday (15M-1H), reduce to 9-10 for more responsiveness. Don't use RSI alone: combine it with market structure and volume.