Relative Strength Index
Measures the balance of recent gains and losses on a bounded scale.
Start with the input, not the story.
The speed and persistence of recent positive versus negative closes.
The simulator's exact RSI 14 calculation runs after a hidden warm-up. The panel marks 30/70 extremes and 40/60 trend references. Crossing one of these levels tells you how recent gains and losses compare; it does not tell you to buy or sell.
Compare fixed 70/30 rules with 60/40 trend rules. Keep the examples where RSI stays extreme, because those are the ones that test your idea.How traders commonly use Relative Strength Index
RSI can describe momentum regimes in a trend or stretch within a range once the market context and threshold rule are fixed.
Measure the balance and persistence of recent gains and losses on a bounded scale.
Keep this job separate from entry timing, stop placement and position size.
A useful counterexample
A reading above 70 or below 30 can persist during a strong trend and does not, by itself, imply a reversal.
Range boundaries for location, RSI for stretch, ATR for invalidation
Each part has a different job. If two tools answer the same question, remove one and compare the result.
Establish where a mean-reversion idea is relevant.
Measures momentum stretch inside that range.
Scales the invalidation buffer and movement.
Follow the same order every time
- Define the range from completed candles before inspecting RSI.
- Choose one observation: threshold entry, threshold exit or regime state.
- Advance to a completed candle and record price location and RSI together.
- Reject observations that occur in the middle of the range or after a confirmed range break.
- Measure results by context rather than assuming every extreme is equivalent.
The indicator is one part of the method
These strategy pages show the market conditions, entry, stop and exit around the indicator.
Range mean reversion
Tests whether qualified boundary excursions revert toward a range midpoint.
- ENTRY
- Enter at the next H1 open after the first qualifying close back inside the frozen range.
- STOP
- Place the stop 0.20 × ATR(14) beyond the excursion extreme and size to 0.50% equity risk, rounded down to 0.01 lot.
- EXIT
- Exit at the frozen range midpoint. If neither stop nor midpoint trades, exit after eight completed H1 bars.
RSI divergence reversal
Tests whether a mismatch between price and RSI swings adds value after exhaustion.
- ENTRY
- Enter next bar open after price closes beyond the highest high of the five bars ending at the confirmed second low for bullish divergence; mirror below the five-bar low for bearish divergence.
- STOP
- Stop is 0.20 × ATR(14) beyond the second price pivot. Risk 0.50% of equity and round down to 0.01 lot.
- EXIT
- Take profit at 2R. Exit at market after 20 completed H4 bars if neither stop nor target has traded.
Support and resistance rejection
A framework for testing reactions at levels that genuinely predate the trade.
- ENTRY
- Enter at the next H1 open after the first qualifying rejection close back above the prior-day low or below the prior-day high.
- STOP
- Place stop 0.20 × ATR beyond the rejection candle extreme. Risk 0.50% of equity and round down to 0.01 lot.
- EXIT
- Take profit at 2R. Exit after 12 completed H1 bars if neither stop nor target trades.
Set up Relative Strength Index on your platform
Match the lesson's period, price input, smoothing and candle timing. Similar names can still produce different values across feeds and platforms.
MT4
Built inAvailable in the standard MT4 indicator library. Names and default settings can differ.
MT5
Built inAvailable in the standard MT5 indicator library. Names and default settings can differ.
TradingView
Built inAvailable in the standard TradingView indicator library. Names and default settings can differ.
“Built in” means the standard platform library contains the underlying indicator. It does not mean its defaults or calculation match every third-party version. Compare the platforms.
Plain-language formula
The same indicator can look slightly different across platforms because the price input, smoothing and rounding may change. Note your settings before comparing two charts.
Where it may help
Momentum regimes, range extremes and divergence studies.
Where it struggles
Strong trends, where an extreme reading can persist for much longer than expected.
What to pair it with
Pair it with something that answers a different question, such as volatility or market direction. Try the indicator on its own before adding more tools.
The shortcut to avoid
Selling at 70 or buying at 30 without trend, location or confirmation.
Try this on a chart
Compare fixed 70/30 thresholds with 60/40 regime rules and predefine exits.
Use the version made for your platform
The MT4, MT5 and TradingView files are separate source implementations—not renamed copies. Read the code, compile or add it on the intended platform, and compare its output with the lesson before relying on it in practice.
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