What is the RSI indicator, how to see overbought and oversold?

The Relative Strength Index (RSI) is a commonly used technical analysis tool to measure the overbought and oversold conditions of stocks, commodities, or other financial assets.

The RSI indicator evaluates the strength of the market by calculating the price changes over a certain period of time. It is based on the ratio of average gains to average losses, and the commonly used calculation period is 14 days. The RSI value ranges from 0 to 100, where a higher value indicates an overbought market and a lower value indicates an oversold market.

When the RSI value exceeds 70, the market is considered overbought, suggesting that the market may be overextended and there is a risk of price correction or decline. When the RSI value is below 30, the market is considered oversold, indicating that the market may be oversold and there is a chance of price rebound or rise.

Investors can assess the overbought and oversold conditions of the market by observing the changes in the RSI indicator. When the RSI value exceeds 70, it may be a sell signal, and when the RSI value is below 30, it may be a buy signal. However, it is important to note that the RSI indicator should be used as a reference tool, and investors should consider other technical indicators and fundamental analysis to make informed decisions.