๐ Capital Market Chronicles – Episode 313: TECHNICAL ANALYSIS – RELATIVE STRENGTH INDEX (Part III)
Now we’re getting to the good stuff ๐๐
This is where RSI stops being “just a line”…
and starts becoming a decision-making tool.
๐ฅ Overbought – “Too Much Excitement!”
When RSI goes above 70:
๐ Market may be overbought
Meaning:
- Too many buyers
- Price may correct
๐ Market Reality
Everyone:
“Buy! Buy! It’s going up!” ๐
RSI:
“This party might end soon…” ๐
❄️ Oversold – “Too Much Panic!”
When RSI drops below 30:
๐ Market may be oversold
Meaning:
- Excessive selling
- Possible rebound
๐ Market Reality
Everyone:
“Sell! It’s crashing!” ๐จ
RSI:
“Relax… it might bounce ๐”
๐ Divergence – The Hidden Signal ๐
This is where RSI becomes next level.
๐ข Bullish Divergence
- Price makes lower low
- RSI makes higher low
๐ Selling pressure is weakening
๐ด Bearish Divergence
- Price makes a higher high
- RSI makes a lower high
๐ Buying momentum is fading
๐ Simple Analogy
Price:
“I’m strong!” ๐ช
RSI:
“Are you though…?” ๐
๐ฏ Why This Matters
Divergence helps you:
- Spot reversals early ๐
- Avoid late entries ๐ฌ
๐ What’s Next?
Ready to level up? ๐ฎ
Next episode:
- RSI Bands
- RSI %B
- Failure Swings
Welcome to advanced RSI mode ๐
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