RSI (Relative Strength Index)
RSI measures momentum on a 0-100 scale. Learn how traders use overbought/oversold readings, the 50-line, and bullish RSI divergences in penny stocks.
What is RSI (Relative Strength Index)?
Relative Strength Index (RSI) measures momentum on a 0–100 scale. Readings above 70 are overbought; below 30 are oversold. RSI between 50 and 70 is the bullish trend zone. Bullish RSI divergence (price makes a lower low while RSI makes a higher low) is one of the more reliable reversal signals, historically 80%+ accuracy in published studies.
How Traders Use RSI (Relative Strength Index)
- Overbought / oversold: above 70 / below 30 — potential mean-reversion.
- 50-line: RSI above 50 is the bullish trend zone; below is bearish.
- Bullish divergence: price makes a lower low while RSI makes a higher low — one of the most reliable reversal signals (80%+ historical accuracy).
- Combine with support: RSI oversold AT a key support level is far stronger than oversold in free-fall.
Where We Use RSI (Relative Strength Index) in Our Penny Stock Scans
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