What is overbought?
When the market goes up too much, too fast — like it got overexcited. RSI crosses above 70. This means most people who wanted to buy have already bought. Not many buyers left. So the market will likely slow down or fall a bit.
What you do: don't buy now. If you're already in profit, book some of it. Keep your stop loss tight.
What is oversold?
When the market falls too much, too fast — like everyone panicked and sold everything. RSI drops below 30. Most of the panic selling is already done. So a bounce or recovery is likely coming.
What you do: don't rush in all at once. Wait for one green candle or a volume pickup as confirmation. Then buy in small parts.
The most important thing people get wrong
RSI above 70 does NOT mean "sell immediately." In a strong bull run, RSI can stay above 70 for weeks. If you short every time RSI hits 70 in a bull market, you'll lose money.
Same on the other side — RSI below 30 does not mean "buy immediately." It can keep falling. Always wait for the price itself to show signs of reversing first.
The one signal that actually works well — divergence
If price is going up but RSI is going down — the rally is getting weak internally. A fall is coming soon even if the chart looks fine. This is called bearish divergence.
If price is going down but RSI is going up — the selling is getting exhausted. A bounce is near. This is called bullish divergence.
This is the most reliable RSI signal. Watch for it.
For Nifty right now
RSI is around 52 — bang in the middle, neutral. No overbought or oversold signal at the moment. Market is just waiting. The next big move depends on whether 23,600 breaks on the upside or 23,300 breaks on the downside.
When the market goes up too much, too fast — like it got overexcited. RSI crosses above 70. This means most people who wanted to buy have already bought. Not many buyers left. So the market will likely slow down or fall a bit.
What you do: don't buy now. If you're already in profit, book some of it. Keep your stop loss tight.
What is oversold?
When the market falls too much, too fast — like everyone panicked and sold everything. RSI drops below 30. Most of the panic selling is already done. So a bounce or recovery is likely coming.
What you do: don't rush in all at once. Wait for one green candle or a volume pickup as confirmation. Then buy in small parts.
The most important thing people get wrong
RSI above 70 does NOT mean "sell immediately." In a strong bull run, RSI can stay above 70 for weeks. If you short every time RSI hits 70 in a bull market, you'll lose money.
Same on the other side — RSI below 30 does not mean "buy immediately." It can keep falling. Always wait for the price itself to show signs of reversing first.
The one signal that actually works well — divergence
If price is going up but RSI is going down — the rally is getting weak internally. A fall is coming soon even if the chart looks fine. This is called bearish divergence.
If price is going down but RSI is going up — the selling is getting exhausted. A bounce is near. This is called bullish divergence.
This is the most reliable RSI signal. Watch for it.
For Nifty right now
RSI is around 52 — bang in the middle, neutral. No overbought or oversold signal at the moment. Market is just waiting. The next big move depends on whether 23,600 breaks on the upside or 23,300 breaks on the downside.
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Phone No: [+91 93102 26243]-
Email: [tradingviewknowledgehub@gmail.com]---
-- Let’s achieve success together!
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Contact Knowledgehub for a detailed consultation: Dm on WhatsApp: [wa.link/a2o0kz]-
Phone No: [+91 93102 26243]-
Email: [tradingviewknowledgehub@gmail.com]---
-- Let’s achieve success together!
Phone No: [+91 93102 26243]-
Email: [tradingviewknowledgehub@gmail.com]---
-- Let’s achieve success together!
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.