Stochastic RSI measures momentum within RSI to highlight overbought and oversold swings, helping commodity traders spot sharper entry and exit signals.
This guide explains what Stochastics RSI can do and show traders as an indicator in technical analysis.
We break down the basics of interpreting potential buy and sell signals with example charts using the Stochastic RSI and offer free resources on additional trading tools.
Read on to find out how Stochastics and RSI Indices work together to produce this comprehensive tool.
What Is The Stochastic RSI?
The Stochastic RSI combines two very popular technical analysis indicators, Stochastics and the Relative Strength Index (RSI).
Whereas Stochastics and RSI are based on price, Stochastic RSI derives its values from the Relative Strength Index (RSI). In short, it is the Stochastic indicator applied to the RSI indicator.
How To Interpret The Stochastic RSI
As will be shown below in the chart of the S&P 500 E-mini Futures contract, the Stochastic RSI attempts to give buy and sell signals and overbought and oversold readings:
In the chart above of the E-mini S&P 500 Futures contract, the RSI indicator spent most of its time between overbought (70) and oversold (30), giving no potential buy or sell signals.
However, the Stochastic RSI used the RSI indicator to uncover potential buy and sell signals.
How To Interpret Potential Buy And Sell Signals
How a trader might interpret the potential buy and sell signals of the Stochastic RSI is given next in the chart of the S&P 500 E-mini:
Stochastic RSI Potential Buy Signal
A trader might consider buying when the Stochastic RSI crosses above the Oversold Line (20).
Stochastic RSI Potential Sell Signal
A trader might consider selling when the Stochastic RSI crosses below the Overbought Line (80).
You can read more about the Stochastics and the Relative Strength Index (RSI).
Further Reading on Momentum Indicators
These momentum tools complement Stochastic RSI: ADX Indicator, Directional Movement Index (DMI), and Relative Strength Index (RSI).
FAQs
What is the difference between RSI and Stochastic RSI?
The relative strength index (RSI) is a tool designed to measure the rate of price movements, namely, speed. On the other hand, the Stochastic indicator measures momentum based on past time periods. The two tools work well together. Together, they make the Stochastic RSI that measures the RSI momentum.
What are RSI strategies used for?
The most common use of the relative strength index (RSI) tool is to measure volatility and in that, indicate potential trends of overselling and overbuying. RSI strategies may be used by traders to indicate a market that is pushing its boundaries, which is useful insight for potential buy, sell, and exit signals in trading.
Technical analysis is most widely used in CFD and forex trading. If you’re ready to apply these techniques, browse our vetted CFD brokers or forex brokers.
Update history
This page was revised 5 times between August 2020 and April 2026.
Added cross-promotional links to CFD and forex broker listings within the RSI strategies section.
Removed broker comparison section and replaced generic Further Reading list with focused momentum indicator resources.
Restructured page with expanded FAQ section, improved introduction clarity, demoted subsection headings, and reorganized broker recommendation placement.
Removed redundant introductory sentence and streamlined broker recommendation section by eliminating unnecessary subheading and combining text for improved readability.
Added introductory explanation of Stochastic RSI signals, created two new sections for buy/sell signal interpretation, and reorganized related indicator links.
The Commodity Briefing
The stories behind the prices. Surprising, useful, occasionally weird - in your inbox every weekday.
- Price moves
- Supply shocks
- Macro drivers
Before you go
Get The Commodity Briefing - free, 2 minutes.