RSI = Relative Strength Index, a momentum indicator derived from the recent price change, and indicate whether the stock is located at overbought or oversold situation.
RSI indicator will have their value between 0 to 100, where higher than 70 means overbought or temporarily overvalued, whereas lower than 30 means oversold or temporarily undervalued.
Back in March, there is a lot of stocks who dropped below 30 from RSI indicator, but there are not much people who dared to buy stocks during that time.
Although when RSI dropped below 30 means the stock is currently being oversold, hence it is a suitable time to buy. However, the writer recommend only buy the stocks that have relatively stronger fundamental. This is because a weaker fundamental company will have a higher chance to drop furthermore even if their share price is currently being oversold.
So, how should we find stocks that are being oversold? Need to search one by one?
In short, RSI indicator can serve as an entry point, but we must first assess the company before buying. We should not invest in a company just because they are being oversold. Remember, once you earn something just by luck, you will eventually need to pay the price.
RSI = 相对强度指数，它是一个从最新的股价变化而演变出来的势头指标，而它也会指出现在这个股是否处于超买或者超卖的状况。
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