{"format":"alysly-page/1","url":"https://alysly.com/learn/oscillators/","json":"https://alysly.com/json/learn/oscillators/index.json","lang":"en-US","title":"Understanding RSI: Overbought, Oversold and Divergences","description":"How the relative strength index is calculated, why overbought does not mean expensive, and what a divergence actually says.","published":"2026-08-02T15:41:33+02:00","modified":"2026-11-01T18:26:04+01:00","alternates":[{"lang":"de-DE","url":"https://alysly.com/de/lernen/oszillatoren/","json":"https://alysly.com/json/de/lernen/oszillatoren/index.json"}],"about":"Machine-readable version of the page at url. It contains the text, tables and key figures published there, but not the interactive charts and tools.","breadcrumb":[{"name":"Investing & Trading Basics","url":"https://alysly.com/learn/"},{"name":"Level 2","url":"https://alysly.com/learn/#level-2"},{"name":"Oscillators: RSI and Stochastics","url":"https://alysly.com/learn/oscillators/"}],"content":[{"type":"paragraph","text":"Level 2 Patterns & Indicators · Part 6/9"},{"type":"heading","level":1,"text":"Oscillators: RSI and Stochastics"},{"type":"paragraph","text":"By Alexander Bock, founder and data analyst","links":[{"text":"Alexander Bock","href":"https://alysly.com/about/"}]},{"type":"paragraph","text":"Oscillators measure speed, not direction. They move between fixed limits, which is where the name comes from. They are also misread with great regularity."},{"type":"heading","level":2,"id":"how-the-rsi-is-calculated","text":"How the RSI Is Calculated"},{"type":"paragraph","text":"The relative strength index compares the average up moves of the last n periods with the average down moves. It puts the result on a scale from 0 to 100. The standard setting is n = 14."},{"type":"paragraph","text":"What follows from this matters. An RSI of 80 means that up moves clearly dominated down moves over the last 14 periods. It does not mean that the price is too high. It contains no information about value at all."},{"type":"heading","level":2,"id":"the-overbought-misconception","text":"The “Overbought” Misconception"},{"type":"paragraph","text":"By convention, the levels 70 and 30 are labeled overbought and oversold. Those two words are the source of the most common mistake in the whole of indicator practice."},{"type":"paragraph","text":"In a strong uptrend the RSI stays above 70 for weeks. Selling at 70 means selling at the start of the trend. The same is true the other way around: in a downtrend it stays below 30 for just as long. A high RSI is a sign of strength, not of excess."},{"type":"paragraph","text":"The levels only mean something in a clearly sideways phase. That is exactly the situation where the question matters least. That is not a flaw of the indicator, but of the way it is usually described."},{"type":"heading","level":2,"id":"divergences","text":"Divergences"},{"type":"image","src":"https://alysly.com/img/ta/rsi-divergence.a1db955a60c459a2505bdcc2585b8e64b421356532098d067dc1112a6f8a99fe.webp","alt":"Price making a higher high above an RSI making a lower high — a bearish divergence"},{"type":"paragraph","text":"(1) Price reaches a higher high. (2) The RSI in the lower panel makes a lower high at the same time: the move carries less momentum than the previous one. That is the RSI's real message — not the 70/30 lines. An RSI above 70 means \"strong trend\", not \"about to fall\"; in uptrends it can stay there for weeks."},{"type":"paragraph","text":"The more robust use: price and oscillator move apart. The price makes a higher high while the RSI makes a lower one. The new move is then carried by less momentum than the previous one."},{"type":"paragraph","text":"Two limits are rarely mentioned:"},{"type":"list","ordered":true,"items":["Divergences can last a long time. They are not a timing tool. In a strong trend, several appear in a row and nothing happens.","Divergences depend on your selection. Which highs you compare is a judgment call. Look long enough and you will find one in any chart."]},{"type":"paragraph","text":"Useful as an observation, unusable as a signal – that sums up the state of the evidence."},{"type":"heading","level":2,"id":"stochastics","text":"Stochastics"},{"type":"paragraph","text":"The stochastic oscillator measures something different from the RSI: where the close sits inside the range of the last n periods. A close at the top of the range puts the value near 100."},{"type":"paragraph","text":"It reacts faster than the RSI and is correspondingly noisier. The usual smoothing (%K and %D) is an attempt to win that back, and it is the same trade-off as between SMA and EMA."},{"type":"heading","level":2,"id":"what-oscillators-are-actually-good-for","text":"What Oscillators Are Actually Good For"},{"type":"list","ordered":false,"items":["As a description of the state: “up moves have dominated for two weeks” is a legitimate statement that you can check.","As a filter: combined with a trend filter, to find entries in the direction of the trend after a pullback.","Not as a reversal signal in a trend. That is the use they are famous for, and the one where they fail systematically."]},{"type":"heading","level":2,"id":"next","text":"Next"},{"type":"paragraph","text":"MACD and ADX measure changes in momentum and the strength of a trend instead. That is the next article."},{"type":"list","ordered":false,"items":[{"text":"Previous Moving Averages","href":"https://alysly.com/learn/moving-averages/"},{"text":"Next MACD and Trend Strength","href":"https://alysly.com/learn/macd-and-trend-strength/"}]},{"type":"heading","level":2,"text":"Indices"},{"type":"table","caption":"Indices, performance over the selected period","columns":["Index","1M"],"rows":[[{"text":"Dow Jones","href":"https://alysly.com/markets/indices/dow-jones/"},{"text":"+1.0%","data":{"m1":"+1.0%","m3":"-4.3%","m6":"+4.9%","ytd":"+7.6%","max":"+30.0%"}}],[{"text":"S&P 500","href":"https://alysly.com/markets/indices/sp500/"},{"text":"-2.6%","data":{"m1":"-2.6%","m3":"-2.2%","m6":"+4.2%","ytd":"+10.6%","max":"+35.6%"}}],[{"text":"MSCI World","href":"https://alysly.com/markets/indices/msci-world/"},{"text":"-2.0%","data":{"m1":"-2.0%","m3":"-2.4%","m6":"+3.7%","ytd":"+10.0%","max":"+35.0%"}}],[{"text":"MSCI ACWI","href":"https://alysly.com/markets/indices/msci-acwi/"},{"text":"-3.3%","data":{"m1":"-3.3%","m3":"-3.0%","m6":"+2.3%","ytd":"+10.2%","max":"+41.5%"}}]]},{"type":"heading","level":2,"text":"ETFs"},{"type":"table","caption":"ETFs, performance over the selected period","columns":["Fund","1M"],"rows":[[{"text":"SPDR S&P 500 ETF Trust SPY","links":[{"text":"SPDR S&P 500 ETF Trust","href":"https://alysly.com/markets/etfs/us/spy/"}]},{"text":"-2.6%","data":{"m1":"-2.6%","m3":"-2.2%","m6":"+4.2%","ytd":"+10.6%","max":"+35.6%"}}],[{"text":"Vanguard S&P 500 ETF VOO","links":[{"text":"Vanguard S&P 500 ETF","href":"https://alysly.com/markets/etfs/us/voo/"}]},{"text":"-2.6%","data":{"m1":"-2.6%","m3":"-2.2%","m6":"+4.2%","ytd":"+10.6%","max":"+34.1%"}}],[{"text":"iShares Core MSCI World UCITS ETF USD (Acc) EUNL","links":[{"text":"iShares Core MSCI World UCITS ETF USD (Acc)","href":"https://alysly.com/markets/etfs/ishares-core-msci-world-ucits-etf-usd-acc/"}]},{"text":"-2.0%","data":{"m1":"-2.0%","m3":"-2.3%","m6":"+4.3%","ytd":"+10.6%","max":"+487.5%"}}],[{"text":"Xtrackers MSCI Emerging Markets UCITS ETF 1c XMME","links":[{"text":"Xtrackers MSCI Emerging Markets UCITS ETF 1c","href":"https://alysly.com/markets/etfs/xtrackers-msci-emerging-markets-ucits-etf-1c/"}]},{"text":"-9.4%","data":{"m1":"-9.4%","m3":"-4.1%","m6":"-3.3%","ytd":"+14.0%","max":"+93.0%"}}]]},{"type":"heading","level":2,"text":"Stocks"},{"type":"table","caption":"Stocks, performance over the selected period","columns":["Stock","1M"],"rows":[[{"text":"NVIDIA Corporation NVDA","links":[{"text":"NVIDIA Corporation","href":"https://alysly.com/markets/stocks/nvidia-corporation/"},{"text":"United States","href":"https://alysly.com/markets/stocks/browse/?country=United%20States"}]},{"text":"-13.5%","data":{"m1":"-13.5%","m3":"-2.5%","m6":"+5.2%","ytd":"+10.8%","max":"+62.2%"}}],[{"text":"Apple Inc. AAPL","links":[{"text":"Apple Inc.","href":"https://alysly.com/markets/stocks/apple-inc/"},{"text":"United States","href":"https://alysly.com/markets/stocks/browse/?country=United%20States"}]},{"text":"-0.3%","data":{"m1":"-0.3%","m3":"+7.3%","m6":"+16.8%","ytd":"+22.1%","max":"+45.8%"}}],[{"text":"Tesla Inc. TSLA","links":[{"text":"Tesla Inc.","href":"https://alysly.com/markets/stocks/tesla-inc/"},{"text":"United States","href":"https://alysly.com/markets/stocks/browse/?country=United%20States"}]},{"text":"+5.2%","data":{"m1":"+5.2%","m3":"+21.7%","m6":"+2.3%","ytd":"-11.4%","max":"+65.3%"}}]]},{"type":"paragraph","text":"Data note 1","href":"#dn-1"},{"type":"heading","level":2,"text":"More Studies"},{"type":"list","ordered":false,"items":[{"text":"Jul 21, 2026 Collectibles ×5.4 for the same cards, matched-model index, Mar 2022 – Aug 2026 Is the Pokémon Card Market in a Bubble? 4,159 Sales Analyzed Prices for PSA-graded cards multiplied. Measured on the same cards they rose 438%, while the raw median shows 786% because pricier cards came up for sale later.","href":"https://alysly.com/analysis/pokemon-card-market-bubble/"},{"text":"May 19, 2026 Crypto 45.6% Bitcoin’s annualized volatility, Jul 2024 – Sep 2026 Bitcoin in Investment Portfolios: The Real Numbers Bitcoin is calmer than it was and still about three times as volatile as the stock market. It moves with stocks, not with gold.","href":"https://alysly.com/analysis/bitcoin-investment-portfolios/"},{"text":"Mar 17, 2026 Wealth €1.2m needed for €3,000 a month indefinitely at a 3% real return Living Off Your Returns: What It Really Takes The capital you need is arithmetic. The return you assume is a guess, and it can triple the answer.","href":"https://alysly.com/analysis/living-off-returns/"}]},{"type":"paragraph","text":"View all studies","href":"https://alysly.com/analysis/#studies"},{"type":"heading","level":2,"text":"Learn"},{"type":"list","ordered":false,"items":[{"text":"MACD and Trend Strength MACD, signal line, histogram – and ADX as strength without direction.","href":"https://alysly.com/learn/macd-and-trend-strength/"},{"text":"Measuring Volatility: Bollinger and ATR Bollinger, ATR, squeeze – volatility drives stops, not direction.","href":"https://alysly.com/learn/volatility/"}]},{"type":"paragraph","text":"Course overview","href":"https://alysly.com/learn/"},{"type":"paragraph","text":"Updated Nov 1, 2026 · Content and figures checked Oct 19, 2026"},{"type":"heading","level":2,"id":"note-legend-h","text":"Data Notes"},{"type":"paragraph","text":"All calculations run automatically and are not investment advice."},{"type":"list","ordered":true,"items":[{"id":"dn-1","text":"Returns computed automatically from the price series, excluding dividends, taxes and costs."}]},{"type":"paragraph","text":"Data and methodology: Alysly · Responsible for content: Alexander Bock","links":[{"text":"Alysly","href":"https://alysly.com/methodology/"},{"text":"Alexander Bock","href":"https://alysly.com/about/"}]},{"type":"paragraph","text":"View all data notes","href":"https://alysly.com/notes/"}],"structured_data":[{"@context":"https://schema.org","@graph":[{"@type":"Organization","@id":"https://alysly.com/#org","name":"Alysly","url":"https://alysly.com/","logo":{"@type":"ImageObject","url":"https://alysly.com/img/icon-512.png","width":512,"height":512},"description":"Data-driven insights, transparent analysis and powerful tools for long-term investors.","email":"mail@alysly.com","contactPoint":{"@type":"ContactPoint","contactType":"customer support","email":"mail@alysly.com","availableLanguage":["de","en"]},"address":{"@type":"PostalAddress","addressLocality":"Haltern am See","postalCode":"45721","addressCountry":"DE"},"founder":{"@id":"https://alysly.com/#founder"},"sameAs":["https://www.linkedin.com/company/alyslycom/","https://www.youtube.com/@alyslycom","https://x.com/alyslycom"],"publishingPrinciples":"https://alysly.com/methodology/"},{"@type":"Person","@id":"https://alysly.com/#founder","name":"Alexander Bock","jobTitle":"Founder and data analyst","url":"https://alysly.com/about/","sameAs":["https://www.linkedin.com/in/abxk/"]},{"@type":"WebSite","@id":"https://alysly.com/#site","url":"https://alysly.com/","name":"Alysly","alternateName":"Alysly Investment Analysis","inLanguage":"en-US","publisher":{"@id":"https://alysly.com/#org"},"potentialAction":{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https://alysly.com/markets/stocks/browse/?q={search_term_string}"},"query-input":"required name=search_term_string"}},{"@type":"WebPage","@id":"https://alysly.com/learn/oscillators/#webpage","url":"https://alysly.com/learn/oscillators/","name":"Oscillators: RSI and Stochastics – Alysly","description":"How the relative strength index is calculated, why overbought does not mean expensive, and what a divergence actually says.","inLanguage":"en-US","isPartOf":{"@id":"https://alysly.com/#site"},"dateModified":"2026-11-01T18:26:04+01:00","publisher":{"@id":"https://alysly.com/#org"},"mainEntity":{"@id":"https://alysly.com/learn/oscillators/#entity"},"primaryImageOfPage":{"@type":"ImageObject","url":"https://alysly.com/img/ta/rsi-divergence-og.4c6ed17f1e27a6cb7aad2f969db8e95abb9f8d33dabca65c7a3c40445385c0ec.png","width":1200,"height":630}}]},{"@context":"https://schema.org","@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"name":"Investing & Trading Basics","item":"https://alysly.com/learn/"},{"@type":"ListItem","position":2,"name":"Oscillators: RSI and Stochastics"}]},{"@context":"https://schema.org","@type":"Article","@id":"https://alysly.com/learn/oscillators/#entity","headline":"Oscillators: RSI and Stochastics","description":"How the relative strength index is calculated, why overbought does not mean expensive, and what a divergence actually says.","inLanguage":"en-US","mainEntityOfPage":"https://alysly.com/learn/oscillators/","image":[{"@type":"ImageObject","height":630,"url":"https://alysly.com/img/ta/rsi-divergence-og.4c6ed17f1e27a6cb7aad2f969db8e95abb9f8d33dabca65c7a3c40445385c0ec.png","width":1200},{"@type":"ImageObject","height":680,"url":"https://alysly.com/img/ta/rsi-divergence.a1db955a60c459a2505bdcc2585b8e64b421356532098d067dc1112a6f8a99fe.webp","width":1280}],"isPartOf":{"@type":"CreativeWorkSeries","name":"Investing & Trading Basics","url":"https://alysly.com/learn/"},"educationalLevel":"Level 2","author":{"@id":"https://alysly.com/#founder"},"publisher":{"@id":"https://alysly.com/#org"},"datePublished":"2026-08-02T15:41:33+02:00","dateModified":"2026-11-01T18:26:04+01:00"}],"notice":"© 2026 Alysly.com. Not investment advice. All data without guarantee. Financial information is analyzed and presented partly with AI assistance."}