The RSI is one of the most popular momentum indicators. Its function is to compare an asset's gains to its losses over a specified time duration. The range of the RSI indicator spreads from 0 to 100.

How to use:

Bullish signal - if the price is in an uptrend, and rising above the 30 level. Or if a cross occurs above the centerline.
Bearish signal - if the price is in a downtrend and fallin under the 70 level. Or if a cross occurs below the centerline.

When a price is above 70, this is considered an overbought signal. Below 30 serves as an oversold signal. The centerline represents gains vs. losses and is usually marked as 50. When above the centerline, the average gains outweigh the average losses. below the centerline is the opposite.

Buy and sell signals can also be created through the use of divergences. Divergences also tend to be more accurate trading signals for the RSI, especially if evident after an oversold or overbought signal.

Trader beware: Extreme price movements may disturb the RSI curve to create false signals. Like all other indicators, use in conjunction with another.

As shown in the above, Cytogen began its uptrend as the RSI was climbing above 30 (bull), passing the centerline (buller), and peaked above 70 (bullish.) After the peak, there is negative divergence - a clear sell signal.