What is RSI (Relative Strength Index)?
RSI (Relative Strength Index) is an indicator that expresses how strong the current market is as a number between 0 and 100 by comparing the price increase and decrease over a certain period of time.
Developed by J. Welles Wilder in 1978, it is still one of the most used indicators.
RSI calculation principle (good to know, but not necessary)
RSI = 100 - (100 / (1 + RS))
RS = average rise / average decline
Period: Usually 14 bags used
You don't need to calculate it yourself. All exchanges, including Bybit and OKX, automatically provide RSI indicators.
RSI Core Rule: 70/30
| RSI section | meaning | signal |
|---|---|---|
| Over 70 | Overbought | 🔴 Downside reversal possible |
| 50~70 | Rising trend | 🟢 Buying advantage |
| 30~50 | downward trend | 🔴 Sell advantage |
| Under 30 | Oversold | 🟢 Upside reversal possible |
Caution: Do not buy just because RSI is below 30. In strong downtrends, RSI may stay below 20 for a long time.
3 ways to use RSI
1. Overbought/oversold signals
The most basic way to use it. Short when RSI is above 70, long when it is below 30.
Cons: Often wrong in strong trends. Be sure to understand the trend direction first.
2. RSI 50 Centerline Strategy
- RSI breaks above 50 → Uptrend reversal signal → Long review
- RSI breaks out from above 50 → downtrend reversal signal → short review
Although this method is simple, it is actually widely used by trend-following traders.
3. RSI divergence (strongest)
Bullsy divergence (long signal)
- Price: Renew low low ↘
- RSI: The low point actually rises ↗ → Weakening downward momentum → Imminent upward reversal
Bearish divergence (short signal)
- Price: Refreshing high highs ↗
- RSI: Highs are actually lower ↘ → Weakening upward momentum → Imminent downward reversal
Futures trading RSI practical strategy
Scalping (1 to 15 minutes)
- RSI period: 7~9
- Entry: RSI 80 or higher → Short / RSI 20 or lower → Long
- Quick profit (0.5~1%)
Swing (1 hour to 4 hours)
- RSI Period: 14 (default)
- Entry: Overbought/oversold + check candle patterns (Doji, reverse hammer, etc.)
- Target: 2-5%
Trend following (4 hours to daily)
- Determine direction above/below RSI 50
- Identify when to liquidate a position through divergence
Why you should not trust only RSI
RSI has many fake signals when used alone. Use with:
- Candle pattern (Doji, hammer shape, etc.)
- Moving Average Line (Check MA direction)
- Trading Volume (Trading Volume Explosion = Reliability ↑)
- Support/Resistance Line
Related guides
- MACD auxiliary indicator complete explanation →
- Doji candle and RSI combination strategy →
- Join Bybit Referral →