Question 1

What does RSI measure?

Accepted Answer

RSI measures the speed and size of recent price changes on a scale from 0 to 100. High readings mean price has risen quickly, low readings mean it has fallen quickly. It describes momentum, not what price will do next.

Question 2

Does an overbought reading mean price will fall?

Accepted Answer

No. Overbought just means a move has been fast and stretched to the upside. In a strong trend, an indicator can stay overbought for a long time while price keeps rising.

Question 3

What is the difference between RSI and MACD?

Accepted Answer

RSI is a bounded oscillator that reads how stretched a move is from 0 to 100. MACD compares two moving averages to show shifts in momentum and trend, and it is not bounded to a fixed range.