The
Relative Strength Index (RSI) measures the balance between buying and selling pressure.
Normally, values below 30–35 signal oversold conditions, but
RSI Disbalance goes further — it looks for moments when momentum collapses beyond what’s typical for that stock.
The strategy activates when:
- RSI < 35 — the market is oversold, sellers dominate.
- RSI < (20-day Avg RSI – 10) — the RSI has dropped more than 10 points below its short-term norm, signaling an abnormal loss of strength.
This dual condition identifies internal imbalance — the point where selling momentum becomes unsustainably heavy.
It often marks a short-term bottom where weak hands exit and accumulation quietly begins.
For deeper confirmation, traders can also compare the
20-day and 50-day average RSI values:
when the short-term RSI average starts rising toward or crossing the long-term one, it reinforces the case for a
bullish reversal in progress.