Measures the speed and change of price movements (scale 0-100). Overbought (>70) = correction risk, oversold (<30) = bounce potential.
Example
Bitcoin drops three days straight and the RSI(14) slides to 22 — below the 30 line. That signals an oversold condition: the sell-off was short-term overdone, so a technical bounce becomes more likely. But a trader doesn't act on RSI alone — they pair it with a support zone. If the RSI then climbs back above 30 while price holds support, that's a possible long setup. Conversely, an RSI above 70 warns of overbought conditions.