Technical Indicators - Relative Strength index (RSI) Strategy

Because the RSI is typically used to detect overbought and oversold markets some traders feel it can’t be used in a trending market, but nothing could be further from the truth. One RSI trading strategy used in trending markets would be to wait for the indicator to signal an overbought condition during an uptrend. The trader then waits for RSI to drop below 50, which signals a long entry. If the trend remains in place price will typically recover off this level and move to new highs.