Trade Stock Indices

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

RSI readings exceeding 70 are categorized as overbought territory: traders often view levels above 70 as potential market peaks and opportune moments to realize 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 explained and shown below, when the RSI reached 70, it showed that the trading was overbought, and this could be seen as a sign that the trend might change.

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 begun 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

If the market is going up or down a lot, the RSI will stay at high or low levels for a long time. If this happens, these high and low areas can't be used as market peaks or lows, because the RSI will stay at these spots for a long period. This is why we say the high and low areas can cause quick changes, so it's best to check these signals by using the RSI centerline crossing 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 Trading Method

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