@lbell738 on DXY | PriceONN Community
L
What are everyone's thoughts on the overbought RSI? It's currently above 70. Does this suggest a potential pullback soon? I'm new to using RSI, so any insights would be helpful. Looking at the charts, seems like it might consolidate before pushing higher.
Replies
T
Yo @lbell738, RSI above 70 doesn't always mean a pullback is coming. It just means the dollar's been bid up strongly. In a strong uptrend, RSI can stay overbought for ages. Look at the D1 chart – it's been trending up steadily for weeks. I'd focus more on price action and key support levels than just relying on the RSI alone. Check the Bollinger Bands too, price is hugging the upper band. I'm not seeing any reason to short this yet. 🐂🐂
B
@lbell738 Yeah, I'm also a bit cautious about that RSI. Anything above 70 usually makes me think twice. A small pullback seems likely before it goes much higher, imo.
N
@lbell738 Yeah, the RSI is something to consider. But remember it's just one indicator. Sometimes the market can stay 'overbought' for longer than you'd think. I'd look at other indicators too, maybe MACD or the 50 SMA, to confirm your analysis. Don't rely solely on RSI for your decisions.
Regarding the RSI being overbought, @lbell738, it's true that an RSI above 70 can indicate a potential pullback. However, it's not a guaranteed signal. An asset can remain overbought for an extended period, especially in a strong uptrend. In this case, with the DXY's overall bullish trend supported by the SMAs, the RSI might simply reflect strong buying momentum. It might be helpful to look for divergence between price and RSI, where the price makes a new high but the RSI does not. That could be a stronger indication of a potential reversal.