The RSI is a momentum indicator. This indicator is used to measure overbought and oversold conditions in the market. It is used in stocks, forex, and commodities trading. This indicator was first developed by Welles Wilder.
When RSI goes below 30, then the market is considered oversold, and it is a signal to buy. When the RSI goes above 70, then the market is considered overbought, and it is a signal to sell. One way to trade reversals in the market using RSI is to use divergence. Besides drawing trendlines on a price chart, you can also draw a trendline directly in the indicator window. So, you can use this indicator to identify an existing trend, and also reversals. The RSI is also used to identify support and resistance levels on a chart.