The Relative Strength Index (RSI) is a widely used momentum oscillator that measures the speed and change of price movements to identify overbought or oversold conditions in a market. It ranges from 0 to 100 and is typically set with a 14-period default.

How to Trade with RSI:

1. Identify Overbought and Oversold Levels:
Overbought: An RSI above 70 indicates that the market is overbought, suggesting a potential price reversal or correction.
Oversold: An RSI below 30 signals the market is oversold, indicating a possible upward reversal.

2. Divergence:
A bullish divergence occurs when the price makes lower lows, but the RSI forms higher lows. This suggests a weakening bearish momentum and a potential upward trend reversal.
A bearish divergence occurs when the price increases, but the RSI forms lower highs, hinting at a potential bearish reversal.

3. Trend Confirmation:
Use RSI to confirm trends. For example, in an uptrend, RSI typically stays above 40, while in a downtrend, it remains below 60.

4. Combine with Other Tools:
Enhance accuracy by pairing RSI with moving averages, support and resistance levels, or candlestick patterns.

By understanding these signals and combining them with proper risk management, traders can effectively use RSI to time their trades.