Today's Lesson: RSI (Relative Strength Index)
1. What is it?
Imagine there's a race in the stock market. RSI is a "gauge" that measures how fast the runner is going at that moment. This number, which ranges from 0 to 100, shows the stock's current strength and speed.
2. Why is it important?
Stock prices don't always go up in the market; sometimes they pause, sometimes they pull back. RSI captures this momentum. It tells you: "This stock is going too fast, it's probably taking a break or could reverse." This helps you protect against sudden declines.
3. How to Read / Use?
Reading RSI is simple, but caution is needed. There are two main areas:
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Overbought: When the RSI value is 70' if it is above, since the stock has risen too fast, the price is expected to rest or fall somewhat. This is like a "sell" signal.
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Oversold: When the RSI value is 30' if it is below, the stock has fallen too fast. This means the price should recover or rise somewhat.
4. Real Example
In today's data, among the most active stocks TTKOM' its situation is a great example for RSI. At its latest value, TTKOM 60.85 TL was at this level and its daily activity +9.94% had set a record. In such a rapid rise, it's necessary to look at the channel value to understand whether the RSI is challenging the 70s. When the channel value reaches 147%' , we understand that this stock is moving very fast and likely needs a short-term correction.
5. Common Mistakes
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Relying Only on RSI: RSI is just an indicator. The general direction of the price, volume, and news are also important. Even if RSI is above 70, if the price is still rising, the "Overbought" signal may be invalid.
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Whipsawing: RSI fell below 30, and the stock continued to decline. The investor said "I'm selling", and the price increased by 50% after 1 week. The biggest mistake is to sell early based on RSI.
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Being Late: RSI sees price movements in hindsight. It gives a signal when the movement starts and when it ends. It does not provide precise timing.
6. Mini Test
Question 1: When the RSI value is 70' in technical analysis, what is generally expected for a stock?
Question 2: When the RSI value is 30' what is the investor's general strategy?
Answers:
1. Overbought (The stock may need to rest or decline).
2. Oversold (There is a high probability of the stock recovering).
7. Summary
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RSI is an indicator that measures how fast a stock is moving.
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70 upper = Overbought (Risk of decline).
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30 lower = Oversold (Opportunity for rise).
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It should be evaluated with other data rather than being used alone.
This lesson is for educational purposes, not investment advice.