The Relative Strength Index, or RSI, is one of the easiest and yet effective tools to gather information on the market. It is the first choice for most of the traders.
Wilder, J. W. developed the RSI and explained that the commoditiy and or the market price should have previously went under a certain price level in order for it to be termed as oversold or bought.
Scalping, swing trading, or long term RSI adaptations and preference settings best. Scalping, swing trading, or long term investing all require adaptations in your settings to fit.
Trading techniques have been explained in a simpler manner to help all traders and investors.
Let me first recap some als of Relative Strength Index, and add some details.
The RSI is an oscillator that is calculated on the price of an asset.
Formula or rules to calculate it:
RSI > 70 => long term price level is termed as overbought and trading shall happen below it.
RSI < 30 => long-term price level is revisited as oversold and predicted to surge in price.
The RSI defaults to “Period 14” of the closing candles, meaning 14 candles for the RSI's time frame in use.
_side note, there is a lot a trader can do to ''unlock'' the full potential of the RSI from trading style to settings_
Let’s start from the top and talk about intraday trading.
Goal is to capture a price movement. Avoid sideways traps.
Recommended settings:
RSI period: 7 or 9 (faster and more responsive)
Timeframe: 5-min, 15-min, or 30-min chart
How to use:
RSI going lower than 30 means possible quick buy bounce.
RSI going higher than 70 means possible quick sell drop.
Use with price action like candlestick reversal patterns and key support/resistance zones.
Extra tips:
Confirm with volume: Volume confirms proper price movement.
Avoid trading during low volume periods—sidways lunch hour RSI signals.
In major trends, RSI tends to remain in the overbought/oversold region—best to ignore counter-trend trades and price wait confirm.
Example:
RSI 9 on a 5-min chart and price is bullish hammer at support means possible long scalp when RSI is 30.
Target: small gains, quick exit.
2 RSI for Swing Trading (Holding 2–10 days)
Goal: Maximize gains in price action during a mid-term period.
Recommended settings:
RSI period: 14 (standard)
Timeframe: Daily chart (sometimes 4-hour)
How to use:
Look for RSI below 30 or above 70 → potential reversal zones
Better: combine RSI with trendlines, moving averages, or chart patterns
RSI divergence: price makes a new low, but RSI makes a higher low → strong buy signal (and vice versa)
Extra tips:
Use RSI in context of the broader trend:
Uptrend: focus on RSI oversold bounces (buy dips)
Downtrend: focus on RSI overbought rejections (short rallies)
Set stop-loss below recent swing lows/highs
Example:
Stock in uptrend, daily RSI drops to 32 near 50-day moving average → watch for bullish candle → enter swing long
3 RSI for Long Positional Trading (Weeks to Months)
Goal: Filter long-term entries and exits.
Recommended settings:
RSI period: 14 or 21 (smoother, less jitter)
Timeframe: Weekly chart
How to use:
RSI crossing above 50 means long term momentum turning bullish
RSI falling below 50 means momentum turning bearish
Look for:
Long-term bullish divergence means price makes lower lows while RSI makes higher lows suggesting possible trend reversal
In strong bull markets, RSI above 70 can remain elevated for long periods; don’t exit too soon. A better strategy is to wait for the RSI slope or cross below 70 before exiting.
Extra advice:
Combine with stalking fundamentals or macro trend
Use alongside weekly moving averages or trendlines for RSI
Focus on long-term investments instead of trying to time the market for every small, short-term move.
Example:
Weekly RSI crosses above 50 after months of being below: long positions can be added gradually.
Final thoughts: One tool, many strategies
RSI is versatile:
Intraday, faster RSI (7-9) for small moves.
Swing, Standard RSI 14 on daily chart with divergence.
Long term, smoother RSI (14-21) on weekly chart to follow broader movements.
No one-setting-for-all-styles applies with RSI.
As with any technical, avoid relying solely on the RSI. Always use price action, support and resistance, and risk management when trading.
Summary Table:
Style
RSI Setting
Timeframe
Main Use
Intraday
7–9
5-15 min
Fast overbought/oversold
Swing
14
Daily
Divergence, reversals
Positional
14-21
Weekly
Shifts in momentum, larger trends
RSI is simple, but when used intelligently, it can be one of the most effective tools in your trading kit.
