Relative Strength Index (RSI) — Explained for FX Replay Users

The Relative Strength Index (RSI) is a momentum indicator that helps traders evaluate whether a market is potentially overbought or oversold — signaling a possible reversal or continuation in price.

In FX Replay, RSI is a powerful tool when combined with replayed price action, structure analysis, and session-based context. It gives you a second layer of insight beyond raw price, especially when identifying high-probability entry or exit zones during key time windows.

How RSI Works

RSI plots a line that oscillates between 0 and 100:

• Above 70 → Possible overbought condition (price may be extended and due for a pullback)
• Below 30 → Possible oversold condition (price may be undervalued and ready to bounce)
• Around 50 → Neutral momentum (used as a filter or trend baseline)

In FX Replay, you can watch how RSI develops in real time or slow motion using the replay slider, allowing you to break down how momentum evolves during key setups — like London/NY opens or kill zone entries.

How FX Replay Traders Use RSI

• Trade confirmation: Use RSI to confirm the strength of a breakout, PO3, or liquidity sweep.
  Example: If RSI stays strong above 50 during a bullish structure break, it can validate directional conviction.
• Divergence spotting: RSI diverging from price (e.g., price makes a higher high but RSI makes a lower high) can act as an early heads-up for trend exhaustion.
  In FX Replay, you can pause and annotate these divergence zones mid-replay for study or refinement.
• Session overlays: Combine RSI with the Custom Session Indicator or HTF levels to isolate when momentum signals occur inside institutional timing windows — this helps separate meaningful signals from noise.

Pro Tips for RSI on FX Replay

• Backtest RSI behavior within specific sessions (e.g., NY Open) across different pairs to see how often RSI extremes align with structure breaks or liquidity events.
• Use RSI with drawing tools like horizontal levels and trendlines to isolate areas where momentum shifts matter most.
• Overlay RSI with moving averages (like EMA or MA Cross) inside FX Replay to build confluence between trend direction and momentum strength.

Limitations to Keep in Mind

• RSI can lag price — use replay mode to test how fast or slow RSI reacts across different assets or timeframes.
• Overbought/oversold doesn’t mean reversal is guaranteed — context is everything.
  That’s why RSI works best in combination with other tools on FX Replay (market structure, sessions, FVG zones, etc.).
• RSI behaves differently in strong trends — price can stay overbought or oversold for extended periods.
  Use trend bias tools to frame when to ignore or lean into RSI signals.

Best Practices

The RSI is not just a number — it's a momentum signature.
Inside FX Replay, you have the ability to test how RSI reacts around news, session opens, and structural shifts.
Use that power to slow down, observe, and train your pattern recognition with precision.