A reading of 30 or less indicates oversold market conditions and a higher chance of price strengthening (rising).

Traders interpret an oversold currency pair as a sign the falling trend is about to reverse, indicating a buying opportunity.

A reading of 70 or above (declining) indicates overbought conditions and increased risk of market weakness.

Some traders interpret an overbought currency pair as a sign that the upward trend is about to reverse, indicating it's time to sell.

The Relative Strength Index (RSI) is a momentum oscillator that measures the speed and magnitude of recent price changes to assess overbought or oversold conditions in a market. It ranges from 0 to 100, with values above 70 indicating an overbought market (potential reversal or pullback) and values below 30 suggesting an oversold market (possible upward correction). Traders use RSI to identify trend strength, potential entry or exit points, and divergences between price and momentum, which can signal reversals. However, RSI alone is not foolproof; it works best when combined with other technical indicators like moving averages or support and resistance levels. In strong trends, RSI can remain overbought or oversold for extended periods, requiring careful interpretation.