RSI in its basic form tells you when something is “overbought” or “oversold”.
Now a deeper insight, on its basic settings, that usually being Anything over 70 for overbought(so sell) and anything under 30 for over sold(so buy).
Now some people I know will adjust the settings to 85 for the overbought signal And 15 for the oversold signal. And that would be the “extremes”
Now here’s why I personally don’t think RSI alone can help you, And why I don’t use it. (notice I didn’t say that you can’t use it that’s completely up to you if you want to use RSI and if it fits into your strategy, great!).
It’s because as you jump from time frame to timeframe the RSI changes. Some timeframes, let’s say the daily, it’s just floating around the mid area and then if you drop to the 1 hour it’s now oversold(meaning buy), but on the 4 hour the trend is showing bearish(meaning sell)
So buy on the 1 hour but I should be selling in the 4 hour?? This is what confuses people. Now I do know people that use it and love it. With other tools it can be helpful, I’m my backtesting it served no purpose for me, but it may for you. Back test and forward test RSI. If it works more than it doesn’t for you, implement it. If not, scrap it.