How to read RSI: lesson 14

Key takeaways

1. 70 and 30 mark speed, not a top or a bottom.
2. In uptrends RSI tends to hold 40–80; in downtrends 20–60.
3. Divergence matters most at a support or resistance zone.
4. The 14-period setting means 14 candles of whatever timeframe you are on.

Level: what 70 and 30 mean

RSI above 70 says recent gains have been much larger than recent losses. In a range, that often comes before a pullback. In a strong trend, RSI can stay above 70 for weeks while price keeps rising. A more useful read is RSI falling back below 70 after being above it — momentum is fading.

Range shift: the trend inside RSI

Watch where RSI turns. If pullbacks keep ending around 40 and rallies reach 70–80, momentum favours buyers. If rallies stall near 60 and dips reach 20–30, sellers are in control. When RSI starts failing at 60 after months of reaching 80, the character of the market has changed even before price shows it. A quick way to see it: scroll back six months on the daily chart and note the RSI value at each swing low; if those values have been creeping lower, the ground under the trend is softening.

Divergence: price and RSI disagree

A lower low in price with a higher low in RSI is a bullish divergence; a higher high in price with a lower high in RSI is bearish. Divergences can run for a long time, so they are strongest when they appear at a level you already marked in lesson 11 and are followed by a price break.

How it looks on BRVX

BRVX's chart runs from 1-minute to 1-month candles, and RSI changes meaning with them: a 14-period RSI on the 1-hour chart describes the last 14 hours, on the daily chart the last 14 days. On a BRVX stock perpetual, those 14 daily candles include weekends, so they cover two calendar weeks rather than nearly three on an exchange chart — the readings will not match an exchange chart exactly.