In order to use the RSI to trade with the trend, it is important to keep in mind that the RSI must show the strength and direction of the trend. That means during an uptrend, the RSI should sustain above 30, usually touching 70 or more. And conversely, during a downtrend, the RSI is typically below 70, usually touching 30 or lower.

As shown below, the market is in an uptrend, RSI continuously crosses the 70 levels and sustains above 30:


The figure below is how the RSI behaves in a downtrend (left of the chart) and then turns uptrend, you will see the values and how the RSI reacts at the 30 and 70 levels, which shows the trend. marked change:


The moment the blue vertical bar is marked on the RSI indicator, we see the RSI breakout 70 and close to 90, indicating a likely change in trend. This is considered one of the reversal signals of the chart above. Then we see the RSI typically touches or exceeds 70 and sustains above 30, indicating a trend reversal into an uptrend.

The next signal that the RSI also gives us is in the figure below. In mid-2015, the RSI fell below 30 and did not bounce back above 70 indicating a downtrend. But then the RSI suddenly rises above 70, showing the potential of the market to return to an uptrend. But then the RSI quickly fell back below 30, so the uptrend has not been established yet. However, a look at the price will notice that it is hardly making a lower low. The downtrend seems to be losing momentum, which is also why the RSI can soar above 70. Then the RSI rises above 70 and tries to stay above 30, at which point the price is also making a rise. higher highs and higher lows. And now the uptrend is confirmed:


The next chart shows that the RSI bounces off the 70 and 30 levels, signaling the market entering into a consolidation stage. Notice how the rising RSI is the same size as the falling RSI. The RSI is not showing the price is not tilting on either side but is just fluctuating. If the RSI is hovering an equal range (above and below) the 50 levels, it's very likely the price is within a certain range and the price will confirm that. As shown below:


Summary

Using the RSI in this way will help the traders to confirm the trend. Once there is confirmation of the trend, you just need to build a trading strategy in the direction of the trend.

In addition, the RSI also helps traders identify a reversal signal. If an asset is in an uptrend but then the RSI falls below 30 or is in a downtrend, the RSI goes above 70, it could be seen as a trend reversal signal.

Changes in the RSI indicator can alert traders to the direction of the trend. However, don't buy simply because the RSI is above 30 or sell when the RSI is below 70. That just tells us that the uptrend might be in good shape. We still need a strategy with more confirmations so we know exactly when to enter a trade and when to exit.