How Is RSI(14) Used in the Leveraged ETF Monitor?
RSI(14) is used purely as an informational momentum indicator—it does not affect trade eligibility or reduce your Eligible Adds. The dashboard shows RSI as "Momentum: Strong," "Momentum: Neutral," or "Momentum: Weak (Caution)" to give you context about whether price movement may be overextended, but this is for your consideration only.
1How It Works
- •RSI(14) is the 14-day Relative Strength Index, measuring momentum from 0 to 100.
- •RSI above 70 often indicates overbought conditions; below 30 indicates oversold.
- •The system interprets RSI into three labels: Strong, Neutral, or Weak.
- •For bullish bias: Strong (RSI 40-70), Neutral (30-40 or 70-80), Weak (below 30 or above 80).
- •The RSI label appears with an "INFO" status in the checklist—not PASS or FAIL.
- •Eligible Adds Today is calculated without any RSI adjustment.
2Example
RSI as Consideration-Only Context
Scenario: Strong uptrend with extended RSI
• QQQ price: $390 (above both SMAs)
• Bias: BULLISH
• RSI(14): 78
Bull Checklist:
✓ PASS: Price > 21-day SMA
✓ PASS: Price > 50-day SMA
ℹ INFO: Momentum: Weak (Caution)
→ RSI is elevated; move may be extended
Eligible Adds Today: 2
Interpretation:
You CAN add 2 tranches—the eligibility is not reduced. However, the "Weak (Caution)" note suggests the uptrend may be getting stretched. You might choose to add fewer tranches or wait, but that's YOUR decision based on the context.
3Common Questions
Does RSI prevent me from adding positions?
No. RSI is informational only. It shows momentum context but does not gate, reduce, or block your Eligible Adds. The system explicitly designed RSI as consideration-only.
Why show RSI if it doesn't affect eligibility?
Context matters. Knowing that a trend is overextended (high RSI in uptrend, low RSI in downtrend) can help you decide position size or timing, even if the rules don't force a specific action.
What does "Momentum: Weak (Caution)" mean?
It means RSI is in an extreme zone (very high in uptrends, very low in downtrends). The move may be overextended. Consider this when deciding how aggressively to add positions.
Should I ignore RSI entirely?
That's up to you. Some traders find RSI useful for timing; others ignore it. The system provides it as additional context without forcing it into the rules.
Why doesn't RSI show PASS or FAIL?
Because it's not a gating criterion. PASS/FAIL implies it affects eligibility. The INFO status clearly indicates it's informational only.
Technical Notes
- —RSI is calculated using the standard 14-period Relative Strength Index formula.
- —The calculation uses Wilder's smoothing method for the average gains and losses.
- —RSI labels (Strong/Neutral/Weak) are computed based on the current bias context.
- —This implementation intentionally keeps RSI as context, not a hard or soft gate.