RSI above 70 shows strong positive momentum in the stock. The stock has risen in the short term, with few reactions downwards. Investors have continued to pay more to buy stocks. This indicates that more buyers are entering the stock and that the price will continue to rise.
RSI above 70 used to be considered a sign of danger. These stocks were said to be overbought and it was assumed they would soon see a reaction down. However, Investtech’s research shows that these stocks have continued to rise, in fact more so than the market.
The following applies to high RSI:
In general we want high RSI, i.e. strong short term momentum, for stocks we own or are going to buy. It can be a psychological challenge to buy such stocks, since they have already risen quite a bit and may seem expensive. However, high RSI indicates that more investors are buying and that the rise will continue.
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The content provided by Investtech.com is NOT SEC or FSA regulated and is therefore not intended for US or UK consumers.
Investtech guarantees neither the entirety nor accuracy of the analyses. Any consequent exposure related to the advice / signals which emerge in the analyses is completely and entirely at the investors own expense and risk. Investtech is not responsible for any loss, either directly or indirectly, which arises as a result of the use of Investtechs analyses. Details of any arising conflicts of interest will always appear in the investment recommendations. Further information about Investtechs analyses can be found here disclaimer.
The content provided by Investtech.com is NOT SEC or FSA regulated and is therefore not intended for US or UK consumers.