Overextended Currencies

Overbought and Oversold Levels:

• The RSI tops out at or above 70 and bottoms out at or below 30.
• RSI usually forms these tops and bottoms before the underlying price chart.

Centerline:

• The centerline for RSI is 50.
• A reading above 50 implies the currency is in a bullish phase as average gains are greater than average losses.
• Readings below 50 indicate a bearish phase.
• Crossovers of the centerline indicate when the currency shifts from bearish to bullish sentiment and vice versa.
• Centerline crossovers can be used to confirm bullish or bearish symbols coming from other indicators and to validate signals from RSI overbought/oversold levels

The green circles and boxes show when the market touched or crossed the 70 line and the stock was considered “overbought.”

The red circles and boxes show “oversold” conditions. At these levels the indicitor suggests that price will begin a reversal during or right after these points.

One should understand that an overbought or oversold position can remain in an extended uptrend or downtrend for some time. Move on to the next page - Extended Showings at Overbought Levels. 

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