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RSI Overbought & Oversold Levels

RSI indicator values above 70 are considered overbought. Index traders often view levels exceeding 70 as market peaks and ideal opportunities for profit-taking.

RSI technical indicator values of below 30 are considered to be oversold: Index traders consider points and levels below the 30 level mark as market bottoms & good points for taking and booking profits.

You should always confirm overbought and oversold levels with RSI center line crossover signals. If these areas mark a top or bottom, double-check with the RSI crossover. Overbought and oversold signals alone often cause whipsaws, so you need that extra confirmation.

The illustration below indicates that when the RSI reached 70, it signaled an overbought market trend. This can be interpreted as a potential indication of an impending trend reversal.

After briefly reversing upward, the market ultimately shifted downward, reaching oversold levels and marking a bottom before beginning an upward trend once again.

RSI Overbought & Oversold Levels - How Do I day trade index Overbought and Oversold Levels?

Overbought & Oversold Levels - RSI Trading Strategies

Over Extended Overbought & Oversold Levels

When the market is trending strongly upward or downwards the RSI indicator will stay at these overbought and oversold levels for a long time. When this happens these over-bought & oversold regions can not be used as market tops & market bottoms because the RSI indicator will stay at these levels for an extended period of time. This is the reason why we say the over-bought & over-sold regions are prone to Index whipsaws & it's best to confirm these signals using RSI center line cross-over strategy.

RSI Trading Indicator Overbought & Oversold Levels - How to day trade index Overbought and Oversold Levels

Over Extended Overbought & Oversold Levels - RSI Indicator Strategy

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