RSI stretch versus trend persistence
Why overbought readings in a clean uptrend are often noise — and how we teach trainees to separate stretch from reversal.
RSI was designed to measure relative strength inside a lookback window, not to predict tops. When price keeps printing higher highs and RSI stays elevated, the oscillator is describing persistence — not a countdown to collapse.
In Momentum Foundations we ask trainees to mark every session where RSI crossed 70 and then note whether price made a meaningful reversal within five bars. The hit rate is humbling. That exercise kills the reflex to fade every hot reading.
A cleaner habit: treat elevated RSI as a reminder to tighten risk management and check higher-timeframe structure, not as a standalone short signal.