Relative Strength Index (RSI), is a momentum oscillator that measures the speed and change of price movements. The RSI oscillates between zero and 100. Traditionally the RSI is considered overbought when above 70 and oversold when below 30. Signals can be generated by looking for divergences and failure swings. RSI can also be used to identify the general trend.
The RSI is straight-forward to interpret and produces very clear trade signals. The RSI scale has two defined regions — one starts at 0 and goes to 30, and the second covers the scale from 70 to 100. In addition to the overbought and oversold indicators described above, technical traders using the Relative Strength Index also look for what is known as a centerline crossover.