RSI (Relative Strength Index) is a momentum indicator that measures the speed and magnitude of recent price changes to evaluate overbought or oversold conditions. The RSI ranges from 0 to 100, with values above 70 typically signaling that an asset may be overbought and values below 30 suggesting it may be oversold. Traders use it to anticipate potential reversals or confirm trends.
Example:
If Bitcoin’s RSI is above 80 after a strong rally, traders may expect a pullback. If RSI falls below 25 during a sharp decline, it could signal a potential rebound is coming soon.