What RSI measures
The Relative Strength Index, developed by J. Welles Wilder, compares the size of recent gains to recent losses over a lookback period — 14 days is the standard. It outputs a value between 0 and 100.
How to read it
- Above 70 — overbought. Momentum is stretched to the upside; a pause or pullback becomes more likely (but strong trends can stay overbought).
- Below 30 — oversold. Selling is stretched; a bounce becomes more likely.
- Around 50 is neutral, and the 40–60 band often acts as a trend filter.
How we use it
RSI is one of the inputs in the Daily Playbook read and in several signal rules. We treat extremes as context, not automatic buy/sell triggers — an overbought reading in a powerful uptrend is very different from one at resistance.