RSI Stock Indices Indicator Over-bought & Over-sold Levels

RSI values of above 70 are considered to be over-bought: traders consider points above the 70 level as market tops & good points for booking profits.

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

These overbought and oversold indices trading levels should be confirmed by RSI center line crossovers signals. If these regions give a market top or bottom, this trade signal should be confirmed using the RSI centerline crossover signal. This is because these over-bought & oversold levels are prone to giving whipsaws in the market.

In the trading example expounded & shown below, when the RSI hit 70, it showed that the trading was overbought, & this could be considered as a trading signal that the trend could reverse.

The chart then reversed the trend after a short while and started to move downwards, until it got to the over-sold levels. This was considered a market bottom after which the chart started to move upward again.

Index RSI Overbought and Oversold Levels: RSI 70 and RSI 30 Stock Index Levels

Over-bought and Over-sold Levels - RSI Stock Index Strategies Methods

Over Extended Overbought & Over-sold Levels

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

Indices RSI Over-bought and Oversold Levels: RSI 70 and RSI 30 Indices Levels

Over Extended Over-bought and Over-sold Levels - RSI Indices Indicator Strategy

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Trade Stock Indices

RSI Stock Indices Indicator Over-bought & Over-sold Levels

Over Extended Overbought & Over-sold Levels