RSI explained simply

Published September 12, 2026 · All articles

RSI stands for Relative Strength Index. It measures how fast and how far a price has moved recently. The result is a number between 0 and 100. A high number means the price went up a lot, fast. A low number means it went down a lot, fast. That is the entire idea.

The 0-100 scale

RSI above 70 is called overbought. It means the price rose quickly and may be due for a pause or pullback. RSI below 30 is called oversold. It means the price fell quickly and may be due for a bounce.

Think of it like a rubber band. When you stretch a rubber band too far in one direction, it is likely to snap back. RSI tries to detect when a price has been "stretched" too far.

How RSI is calculated

RSI looks at the last 14 trading days (the standard setting). It calculates the average gain on up days and the average loss on down days. Then it turns that into a 0-100 score using a simple formula.

If all 14 days were up days: RSI is near 100
If all 14 days were down days: RSI is near 0
If gains and losses were roughly equal: RSI is near 50

How SignalsTrades uses RSI

In SignalsTrades, RSI is one of 13 rules. The thresholds are:

RSI below 30 (oversold): fires a BUY vote
RSI above 70 (overbought): fires a SELL vote
RSI between 30 and 70: no vote, the rule shows NEUTRAL

RSI alone is not enough to trade. A pair can stay overbought for weeks in a strong uptrend. That is why SignalsTrades requires multiple rules to agree before issuing a signal. RSI is one vote, not the final decision.

RSI in a trending market

In a strong uptrend, RSI may stay above 60 for days. Seeing RSI at 72 and shorting just because it is "overbought" is one of the most common beginner mistakes. RSI overbought in an uptrend is often a sign of strength, not weakness. Context from other rules (momentum, moving average, session timing) is required to judge the direction correctly.

A simple way to read RSI

When you see the RSI rule fire in a signal, look at the reading shown. If it says "RSI 28 (oversold)" alongside a BUY verdict, multiple other rules also voted BUY. That combination is stronger than RSI alone. If RSI shows NEUTRAL, it simply abstained from the vote.

Is RSI the same for every currency pair?

Yes, the calculation method is the same. But each pair has its own RSI because each pair moves independently. EUR/USD can be overbought while GBP/USD is neutral. SignalsTrades calculates RSI separately for each pair using that pair's own price data.

Should I use RSI on its own to trade?

Not recommended. RSI is a useful filter but it produces too many false signals when used alone. Combining it with trend rules (moving average, momentum) and sentiment rules (Fear and Greed, news) dramatically improves the accuracy of RSI signals.

What timeframe does SignalsTrades use for RSI?

SignalsTrades uses 14-period RSI on daily closes. Daily RSI is more reliable than hourly or 15-minute RSI because it filters out short-term noise and focuses on the underlying trend.

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