46 · RSI MOMENTUM

Seventy is a convention

The Family

• RSI — average gains vs. losses, 0\u2013100 \u2014 best read with trend + divergence.
• STOCHASTIC (COUSIN) a different formula, similar overbought/oversold framing.
• MACD (COUSIN) momentum via moving-average difference, not a bounded oscillator.
• THE FALSE OVERBOUGHT RSI above 70, no divergence, inside a genuinely strong trend.

How to Read It

• ANATOMY \u2014 14-period default, scaled 0\u2013100, 70/30 as convention.
• TREND FIRST \u2014 strong trends can pin RSI at an extreme for weeks.
• DIVERGENCE \u2014 price and RSI disagreeing at highs/lows is the real edge.
• CONFIRMATION \u2014 wait for price itself to turn before acting on a divergence.

The One Rule

The threshold asks a question; divergence against price answers it.

Educational content on classic market theory — not trading advice.