Indicators
RSI (Relative Strength Index)
4 min
The RSI — known in Portuguese-speaking markets as the IFR (Índice de Força Relativa) — is a momentum oscillator that measures the speed and size of recent price moves on a scale of 0 to 100.
How to read it
- Above 70 is conventionally overbought — the move up has been fast and may pause.
- Below 30 is conventionally oversold — the move down has been fast and may bounce.
- The 50 line acts as a momentum midpoint; staying above it suggests bullish control.
Beyond the obvious
The most respected RSI signal is divergence: price makes a new high but RSI makes a lower high (bearish divergence), or price makes a new low but RSI makes a higher low (bullish divergence). Divergence warns that momentum is fading beneath the surface.
The classic mistake
"Overbought" does not mean "sell now". In a strong trend, RSI can sit above 70 for a long time while price keeps climbing — selling every overbought reading in an uptrend is a fast way to lose. Treat overbought/oversold as context, and reserve the actual signals for divergence and for moves back across the 30/50/70 lines, ideally with the trend.
This content is for educational and informational purposes only and is not investment, financial, tax or legal advice. Trading and investing carry risk, including the possible loss of capital. Any performance shown by third-party tools is hypothetical and not a promise of future results. Do your own research and consider professional advice before making any decision.