While an inherent risk exists in moving against conventional wisdom, at the heart of any truly powerful investment thesis is the spirit of contrarianism; that is, having the fortitude to bet on a dynamic or trend that has yet to actually materialize. After all, once an event is no longer an act of faith, it usually ceases to be a robustly attractive opportunity.
And that’s also the underlying theme of the Relative Strength Index or RSI. According to Barchart, the RSI is a trading tool, with the main purpose being to “measure the market's strength and weakness. A high RSI, above 70, suggests an overbought or weakening bull market. Conversely, a low RSI, below 30, implies an oversold market or dying bear market.”
