Why does RSI stay overbought for so long in a strong trend?
I sold when RSI went above 70 and price kept rising for days. Did I misuse the indicator?
For education only. This is not financial advice. Trading carries a high risk of loss.
Log in to reply.
2 Answers
Best answer
Because RSI measures the speed of recent moves, not whether price is too high. In a strong uptrend RSI can stay above 70 for a long time, and selling just because it is overbought is a common way to lose money.
Better ways to use it:
- In an uptrend, look at dips of RSI toward the 40 to 50 area as possible buying zones. In a downtrend, look at rallies toward 50 to 60.
- Use overbought and oversold readings mainly in ranging markets.
- Treat divergence as a warning, not a signal, and wait for price to confirm.
Log in to reply.
One more tip: check RSI on a higher timeframe. If the daily RSI is strongly bullish, short signals on M15 are fighting the trend.
Log in to reply.
