Relative Strength Index

RSI is another momentum oscillator. RSI attempts to pick reversals in the trend. As with Stochastics, they are read on a scale between 0 and 100. A reading above 80 indicates an overbought market and readings below 20 indicate an oversold market. Trading on RSIs should occur only when there is a direction change above or below the 80 and 20 lines, as RSI lines can often remain above or below the 80, 20 levels for prolonged periods of time during strong trending markets.