How NOT to trade the RSI

  1. Overbought/oversold RSI signals do not signal an imminent market reversal.
  2. Price/RSI divergence means that price is losing momentum, but don’t use this as an excuse to trade against the prevailing trend.
  3. Don’t be delusional that the RSI will always move from 30 all the way back to 70 or from 70 down to 30 within your holding period. This is to say that range-trading the RSI with a short-term and counter-trend focus is not a good idea.