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THE DAO WAYBEHAVIORAL MARKET INTELLIGENCE

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RSI: what it measures and what needs testing

RSI describes recent price momentum. Separate the measurement from the question of predictive usefulness.

Short answer

RSI compares smoothed price gains and losses on a scale from 0 to 100. A reading below 30 is conventionally called oversold; it does not by itself establish a future reversal.

Measurement and interpretation

The lookback changes sensitivity. Extremes can persist in a sustained trend. Divergence is a difference between price and indicator behavior; its presence is not proof of a profitable strategy.

What question does DAO ask?

Planned question: does subsequent movement after RSI below 30 differ from a matched baseline? Until reviewed data exists, that question remains open.

Boundaries

This explains a definition, not a DAO research result. No reviewed comparison of crypto and equities, timeframes, or RSI and MACD is presented here. These questions remain in the validation plan.

Sources for this explanation

StockCharts / RSI definition and interpretation

RSI indicator: what it measures and how to test it | DAO SYSTEM