RSI and MACD Decoded

RSI (Relative Strength Index) and MACD (Moving Average Convergence Divergence) both measure momentum, but from different angles.

RSI operates on a 0 to 100 scale. Above 70 is "overbought" — the move may be stretched. Below 30 is "oversold" — selling may be exhausted. But overbought doesn't mean "sell now." Strong trends can stay overbought for weeks.

What matters more than the absolute level: - Direction: RSI curling up from oversold is a bounce signal. RSI rolling over from overbought warns of a pullback. - Divergence: If price makes a new high but RSI makes a lower high, momentum is weakening despite the price move. This is one of the most powerful signals in technical analysis.

MACD tracks the relationship between two EMAs (12-period and 26-period) and a signal line (9-period EMA of MACD). - MACD crossing above the signal line = bullish momentum shift - MACD crossing below = bearish momentum shift - The histogram shows the gap between MACD and signal. Growing bars = accelerating momentum. Shrinking bars = momentum fading.

In Basejump, both RSI and MACD are computed on every scan and displayed on the setup detail page. Each casts a vote in the conviction system: - RSI rising from below 50 or in a bullish zone = +1 bullish - MACD with a bullish crossover or positive histogram = +1 bullish - The opposite conditions cast bearish votes

Together with EMA, VPA, and pattern recognition, these five voters determine both the direction and conviction level of every setup.