A single number crossing a line feels like a signal, but in a strong trend it can stay pinned there for weeks while price keeps climbing — the real edge is divergence, not the threshold.
J. Welles Wilder Jr. introduced the Relative Strength Index in his 1978 book, comparing average recent gains against average recent losses, scaled to a simple 0–100 line.
Wilder's own suggested 70/30 bands spread as a simple, teachable shortcut — "overbought," "oversold" — even though he described them as adjustable guides, not fixed laws.
Traders who sold every "overbought" reading learned the hard way, across decades of strong bull runs, that RSI can stay pinned above 70 for a long stretch while price simply keeps climbing.
Serious use today weighs the prevailing trend and watches for divergence against price — the raw 70/30 crossing is a prompt to look closer, not a trigger to act.
Over a lookback window (14 periods by default), RSI compares the size of up-moves against the size of down-moves — 70 and 30 are Wilder's own suggested bands, not fixed physical laws.
In a genuinely strong trend, RSI can stay pinned above 70 (or below 30) for an extended stretch — selling every touch means fighting the trend again and again.
When price prints a new high while RSI prints a lower high (or the mirror at lows), momentum is genuinely fading beneath the surface — a far more reliable warning than the threshold alone.
Through the strongest stretch of that bull run, RSI stayed pinned near or above 70 for weeks at a time, while price kept climbing well past where a threshold-seller would have exited.
Around that top, price pushed to a new high while RSI printed a clearly lower high — a textbook bearish divergence that preceded the subsequent decline.
Price is in a strong, sustained uptrend. RSI crosses above 75 with no divergence against price. A trader shorts immediately. Sound?
Price makes a clear new high. RSI, at the same time, makes a clearly lower high than its own prior peak. What does this combination suggest?
RSI oscillates between 45 and 60 for weeks, never approaching either threshold. A trader keeps looking for a signal anyway. What should they conclude?
Price above, RSI below, watched tick by tick on the left — and the mark it leaves in the ledger on the right. A genuine bearish divergence, a mirrored bullish one — and a false overbought signal that simply kept climbing.
Price makes a new high. Judge whether RSI genuinely disagrees — then call it: a real divergence, or just confirming momentum.
The classic error is trading the raw 70/30 crossing as if it were a complete signal on its own. The discipline is mechanical: check the prevailing trend first, then require a genuine divergence between price and RSI before treating it as a warning.
Wilder's formula endures because it's simple, but simplicity is exactly what turns 70 into folk wisdom instead of a tool. Read it against the trend, and let a genuine divergence — not the crowd's favorite number — do the talking.
Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.