Deeper Insights

The RSI suggestion of waiting for the indicator to cross out of its oversold or overbought range in the direction you want to trade is good advice, but the market does not always play out that smoothly.

The blue arrows point out the traps inside this trend if you are only using the RSI for entries. When you look at the actual structure of the trend, you can clearly see the higher highs and higher lows. You can also find the last low that should hold if the momentum of that uptrend is still valid.

The yellow arrow shows that last low. Once the last low of an uptrend breaks, the previous high zone deserves more attention because price may start respecting that area differently. The red arrow shows how the previous high held, which helped confirm the RSI sell signal again.

That is the type of setup you want to aim for. The indicator reading alone is not enough. You want the RSI signal to line up with good market structure before you trust the trade.