RSI – oversold / overbought limits

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Hi Guys,

I know RSI has been a hot topic lately. I’ve been following your post/articles on this measurement tool (thanks very much, BTW!), plus doing some of my own research. I noticed you and some brokerage firms (like Fidelity) use 30 as the limit for oversold, and 70 for overbought. I’ve noticed some other investment gurus, as well as the brokerage I use, seem to use 20 and 80 for their limits. Just wondering if you could explain why there’s a difference?
thanks!

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Asked on October 16, 2020 10:13 am
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Hey there.

Are they possibly using the Money Flow Index? The MFI is very similar to the RSI in the fact is tracks price movements, but it also tracks the "money flow" in the stock by adding volume into the mix.

Oversold/overbought conditions with the MFI are 20/80 respectively.

If this isn't the case, it's very likely they're just using their own methodology. I mean in general oversold/overbought is 30/70, but an individual investor could change these how they please to suit their style.

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Posted by Dan Kent
Answered on October 16, 2020 10:16 am
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