RSI in Trading: How to Trade the Indicator on Pocket Option

RSI (Relative Strength Index) is one of the most popular indicators among Pocket Option traders. It doesn't predict the future, but it's good at showing when an asset has "overheated" and the move is about to run out of steam. Let's break down what this indicator is and how to work with it.

Below is a video walking through the RSI strategy on real trades in Pocket Option:

What Is RSI

RSI measures the speed and strength of recent price changes and shows the result as a value from 0 to 100. It's built from the ratio of average price gains to average price losses over a chosen period, 14 candles by default.

If the price has mostly been rising, RSI climbs toward the upper values. If it's mostly been falling, RSI drops toward the lower values. The indicator itself is drawn as a separate line below the price chart.

How to Read the Indicator

RSI has three key zones:

• Above 70: the asset is considered overbought, the price rose too fast, a downward correction is likely.
• Below 30: the asset is oversold, too sharp a drop, a bounce upward is likely.
• Around 50: an equilibrium zone, no clear edge for buyers or sellers.

Important to understand: the 70 and 30 zones by themselves aren't a "sell" or "buy" signal. They're a "pay attention" signal, and entering a trade needs additional confirmation.

Basic RSI Entry Strategy

1. Bounce off the level. Wait for RSI to enter the zone above 70 or below 30, then reverse and cross back over that boundary (70 or 30) in the opposite direction. This confirms that the overheating has already played out rather than continuing.

2. Divergence. If price makes a new high but RSI doesn't make a new high (or the opposite on the lows), that's a signal the momentum of the move is weakening. Divergences often precede a reversal more reliably than a simple 70/30 crossover.

3. Don't trade against a strong trend. In a strong uptrend, RSI can stay above 70 for a long time – that's not an anomaly, it's normal for a strong move. In that case, it's better to use the 50 zone to confirm direction rather than blindly try to catch a reversal.

Example from the Pocket Option Interface

On the Pocket Option chart, open the indicators panel (the fx icon on the toolbar above the chart) and find RSI in the list. After adding it, a separate panel with the RSI line and the 30 and 70 levels appears below the price chart, and the period and level settings are available via the gear icon next to the indicator's name.

The asset's price rises for several candles in a row, RSI climbs to 78 on its panel. Then a candle with a long upper wick forms on the price chart, and the RSI line drops back below 70. That's the entry point for a downward trade: the signal is confirmed both by the reversal on the chart and by the indicator returning to the neutral zone.

Common Mistakes

• Entering immediately on the 70/30 crossover, without waiting for confirmation: this way the indicator often pulls you into a trade too early.
• Ignoring the overall trend: in a strong move, RSI can stay in the overbought/oversold zone for hours.
• Using RSI as the only indicator. It works well combined with support/resistance levels or another oscillator.

RSI and Automation

RSI is understandable, formalizable logic: a level crossover, exiting a zone, divergence – all of this can be set as a clear entry rule. That's exactly why the indicator is often the basis for automated strategies, including in the Pocket Option Bot settings: the bot tracks RSI signals against the chosen conditions and opens trades without the trader's involvement.

Bottom Line

RSI is a simple, visual indicator, but it doesn't replace risk management. As with any strategy, new settings should first be tested on a demo account before moving to a real deposit. Trading in financial markets always carries the risk of losing funds.