Dave Keller talks about a favorite tool called the Relative Strength Index, or RSI. He shows how RSI works with the S&P 500, Broadcom, Apple and Ford. The goal is to explain what “overbought” and “oversold” really mean, how changes in momentum can hint at a new market direction, and why some traders get the RSI signal wrong.
Right now the S&P 500 has moved down a little after reaching very high levels. The big question isn’t if the market will pull back – it already is – but how far the momentum will fall. Dave points out that certain RSI numbers can tell us whether buyers are still in charge during the dip.
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