{"id":2125,"date":"2026-09-21T05:17:15","date_gmt":"2026-09-21T05:17:15","guid":{"rendered":"https:\/\/entri.app\/explore\/?post_type=curriculum&#038;p=2125"},"modified":"2026-09-22T09:53:14","modified_gmt":"2026-09-22T09:53:14","slug":"rsi-indicator","status":"publish","type":"curriculum","link":"https:\/\/entri.app\/explore\/stock-market\/rsi-indicator\/","title":{"rendered":"RSI Indicator"},"content":{"rendered":"<p>In the Indian stock market, the Relative Strength Index is one of the most popular tools used by traders and investors. Its utility is to understand whether a stock or index has moved too far, too fast. This tool helps you spot potential turning points before they happen. Due to this reason, it has become a favourite among both beginners and experienced traders on NSE and BSE.<\/p>\n<h2><strong>What does this Tool Measure?<\/strong><\/h2>\n<p>This momentum oscillator measures the speed and change of recent price movements. This measurement is done on a scale of 0 to 100. It shows you whether a stock is being bought aggressively i.e. overbought or sold aggressively i.e. oversold. This often signals that a price reversal or pause could be coming.<\/p>\n<h2><strong>How does it Work?<\/strong><\/h2>\n<ul>\n<li>Calculated using average gains and average losses over a set period (usually 14 days)<\/li>\n<li>Plotted as a line moving between 0 and 100<\/li>\n<li>Moves closer to 100 when buying pressure is strong<\/li>\n<li>Moves closer to 0 when selling pressure is strong<\/li>\n<\/ul>\n<h2><strong>Key Levels to Remember<\/strong><\/h2>\n<table>\n<tbody>\n<tr>\n<td><strong>Reading\u00a0<\/strong><\/td>\n<td><strong>Meaning\u00a0<\/strong><\/td>\n<td><strong>What Traders Often Do\u00a0<\/strong><\/td>\n<\/tr>\n<tr>\n<td>Above 70<\/td>\n<td>Overbought zone<\/td>\n<td>Watch for possible price correction or booking profits<\/td>\n<\/tr>\n<tr>\n<td>Below 30<\/td>\n<td>Oversold zone<\/td>\n<td>Watch for possible bounce-back or buying opportunity<\/td>\n<\/tr>\n<tr>\n<td>Around 50<\/td>\n<td>Neutral zone<\/td>\n<td>No strong bias either way<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2><strong>Why Indian Traders Use it<\/strong><\/h2>\n<p>When it comes to Indian markets, especially mid-cap and small-cap stocks, are famous for sharp rallies and equally sharp corrections. This tool helps traders:<\/p>\n<ul>\n<li>Identify when a rallying stock like a PSU bank or IT counter may be running out of steam<\/li>\n<li>Spot potential entry points in fundamentally strong stocks that have been beaten down<\/li>\n<li>Confirm trends alongside other tools like moving averages<\/li>\n<li>Never chase a stock purely based on price action or social media hype<\/li>\n<\/ul>\n<h2><strong>Step-by-Step Process to Read it on a Chart<\/strong><\/h2>\n<ol>\n<li>Open the chart of any stock or index (examples are Nifty 50 or Bank Nifty) on your trading app<\/li>\n<li>Add the oscillator from the indicators list, keep the default as 14-period setting<\/li>\n<li>Look at where the line currently sits, whether it is above 70, below 30, or in between<\/li>\n<li>Check if the line is diverging from price (an example is price making a new high while the line makes a lower high) as this can hint at weakening momentum<\/li>\n<li>Combine this reading with support, resistance, or trend lines before making any decision<\/li>\n<\/ol>\n<h2><strong>5 Common Signals to Check Out<\/strong><\/h2>\n<table>\n<tbody>\n<tr>\n<td><strong>Overbought reversal<\/strong><\/td>\n<td>Line crosses above 70 and then falls back below it<\/td>\n<\/tr>\n<tr>\n<td><strong>Oversold bounce<\/strong><\/td>\n<td>Line crosses below 30 and then rises back above it<\/td>\n<\/tr>\n<tr>\n<td><strong>Bullish divergence\u00a0<\/strong><\/td>\n<td>Price falls to a new low, but the line does not \u2014 often seen before a recovery<\/td>\n<\/tr>\n<tr>\n<td><strong>Bearish divergence\u00a0<\/strong><\/td>\n<td>Price rises to a new high, but the line does not \u2014 often seen before a correction<\/td>\n<\/tr>\n<tr>\n<td><strong>Centerline crossover\u00a0<\/strong><\/td>\n<td>Line moving above or below 50 to confirm trend direction<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2><strong>3 Key Points to Keep in Mind<\/strong><\/h2>\n<ul>\n<li>During strong trending markets, a stock can stay overbought or oversold for a long time, so don&#8217;t rely on this reading alone<\/li>\n<li>It works best when combined with volume, trend lines, or moving averages<\/li>\n<li>Shorter periods (like 9) react faster but give more false signals; longer periods (like 21) are smoother but slower to react<\/li>\n<li>It is a technical tool and does not account for company fundamentals, news, or quarterly results<\/li>\n<\/ul>\n<h2><strong>Quick Recap<\/strong><\/h2>\n<table>\n<tbody>\n<tr>\n<td><strong>Aspect\u00a0<\/strong><\/td>\n<td><strong>Detail\u00a0<\/strong><\/td>\n<\/tr>\n<tr>\n<td>Scale<\/td>\n<td>0 to 100<\/td>\n<\/tr>\n<tr>\n<td>Default period<\/td>\n<td>14 days<\/td>\n<\/tr>\n<tr>\n<td>Overbought zone<\/td>\n<td>Above 70<\/td>\n<\/tr>\n<tr>\n<td>Oversold zone<\/td>\n<td>Below 30<\/td>\n<\/tr>\n<tr>\n<td>Best used with<\/td>\n<td>Trend lines, moving averages, volume<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2><strong>Final Thoughts<\/strong><\/h2>\n<p>As someone trading in the Indian markets, learning to read this indicator well can add real value to your decision-making process. It won&#8217;t predict the future with certainty. However, it gives a useful sense of momentum and possible turning points.<\/p>\n<p>As in the case of any technical tool, it works best as part of a broader strategy rather than in isolation. Hence beginners should practice reading it on historical charts before applying it to live trades.<\/p>\n<table>\n<tbody>\n<tr>\n<td colspan=\"2\">\n<p style=\"text-align: center;\"><b>Also Read<\/b><\/p>\n<\/td>\n<\/tr>\n<tr>\n<td><a href=\"https:\/\/entri.app\/explore\/stock-market\/introduction-to-technical-analysis\/\" target=\"_blank\" rel=\"noopener\"><b>Introduction to Technical Analysis<\/b><\/a><\/td>\n<td><a href=\"https:\/\/entri.app\/explore\/stock-market\/how-to-buy-and-sell-shares\/\" target=\"_blank\" rel=\"noopener\"><b>How to Buy and Sell Shares\u00a0<\/b><\/a><\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: center;\"><a href=\"https:\/\/entri.app\/explore\/stock-market\/candlestick-chart-basics\/\" target=\"_blank\" rel=\"noopener\"><b>Candlestick Chart Basics<\/b><\/a><\/td>\n<td>\n<p style=\"text-align: center;\"><a href=\"https:\/\/entri.app\/explore\/stock-market\/types-of-chart-patterns\/\" target=\"_blank\" rel=\"noopener\"><b>Types of Chart Patterns<\/b><\/a><b>\u00a0<\/b><\/p>\n<\/td>\n<\/tr>\n<tr>\n<td>\n<p style=\"text-align: center;\"><a href=\"https:\/\/entri.app\/explore\/stock-market\/fibonacci-retracement-strategy\/\" target=\"_blank\" rel=\"noopener\"><b>Fibonacci Retracement Strategy<\/b><\/a><b>\u00a0<\/b><\/p>\n<\/td>\n<td>\n<p style=\"text-align: center;\"><a href=\"https:\/\/entri.app\/explore\/stock-market\/trendline-trading-strategy\/\" target=\"_blank\" rel=\"noopener\"><b>Trendline Trading Strategy\u00a0<\/b><\/a><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n","protected":false},"excerpt":{"rendered":"<p>In the Indian stock market, the Relative Strength Index is one of the most popular tools used by traders and investors. Its utility is to understand whether a stock or index has moved too far, too fast. This tool helps you spot potential turning points before they happen. Due to this reason, it has become [&hellip;]<\/p>\n","protected":false},"author":14,"featured_media":0,"template":"","meta":{"_acf_changed":false},"curriculum-category":[111,112,141],"custom_linking_tags":[],"class_list":["post-2125","curriculum","type-curriculum","status-publish","hentry","curriculum-category-stock-market","curriculum-category-stock-market-tutorials","curriculum-category-advanced-technical-analysis"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>RSI Indicator<\/title>\n<meta name=\"description\" content=\"Wondering what RSI Indicator means in stock market? 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