How to Use the RSI
                     How to Use the RSI
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RSI Basics – Overbought & Oversold Zones
RSI Above 70 → Overbought
● Signals potential sell opportunity
● Price may be due for a correction
RSI Below 30 → Oversold
● Signals potential buy opportunity
● Price may be undervalued
Example:
● If RSI rises above 70, it could mean the stock is overbought 
and may correct soon. If it drops below 30, a bounce-back is 
likely.
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RSI Divergence – Spotting Reversals
Bullish Divergence
● Price makes a lower low
● RSI makes a higher low
→ Signals weakening selling pressure
Bearish Divergence
● Price makes a higher high
● RSI makes a lower high
→ Signals weakening buying strength
Example:
● If a stock falls to ₹100 (lower low), but RSI moves from 25 to 30 
(higher low), that’s a bullish divergence.
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Using RSI with Trend Analysis
In an uptrend:
● RSI stays above 30, often near 70
● → Buy the dips when RSI nears 40–50
In a downtrend:
● RSI stays below 70, often near 30
● → Sell the rallies when RSI nears 60–65
Example:
● If a stock is rising and RSI hovers around 40 on pullbacks, it 
might be a good entry point.
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Key Takeaways for RSI Trading
● RSI helps identify momentum shifts
● Combine RSI with price action for better accuracy
● Watch for divergences and trend behavior
Pro Tip: Don’t rely solely on RSI. Use it with 
support/resistance levels, volume, or other indicators for 
better decisions.
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Disclaimer
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