Guide · Mean reversion
Does RSI 30/70 work?
Across 375 stocks, RSI 30/70 cut the worst fall on 94%, beat buying and holding on risk-adjusted return on 10% and on raw return on 10%. Mainly a seatbelt: it softened the big falls on most stocks, but usually gave up return to do it.
What it predicts
The textbook use of Wilder's RSI: buy when it climbs back above 30 (oversold), sell when it drops back below 70 (overbought).
- In when the 14-day RSI crosses up through 30.
- Out when it crosses down through 70.
Mean reversion plays bet that short, sharp moves tend to snap back. The family guide
How to use it
- It trades rarely (about 1.8 switches a year), so it suits someone who checks in occasionally, and a single bad call can last months.
- It's right often (62% of calls), but check the size of the misses: a high hit rate can hide a few large losses.
- It sits in cash much of the time (holding on about 38% of days), so judge it on risk-adjusted return rather than on matching a rising market.
- It worked best on Micro caps (67% beat holding on risk-adjusted return) and worst on Industrials & rentals (0%).
- Use it as one input. Your signal combines the plays you count with the other factors you weight into one call.
When it worked
RSI 30/70 did best against holding in the 2008 crash (+9% median gap) and worst in the 2020–21 rally (−24%). Median gap in return against holding the same stock (per year over stretches longer than 18 months; crypto excluded).
| 2008 crash | Recovery 2009–19 | COVID drop | 2020–21 rally | 2022 bear | Since Oct 2022 | |
|---|---|---|---|---|---|---|
| RSI 30/70 | +9% | −10% | +7% | −24% | +8% | −7% |
Where it worked
By kind of stock: how often it beat holding on risk-adjusted return, and the median Sharpe ratio gap.
| Group | Beat holding, risk-adjusted | Sharpe gap |
|---|---|---|
| Micro caps | 67% | +0.08 |
| Industrials & materials | 16% | -0.19 |
| Semiconductors | 13% | -0.23 |
| Consumer & retail | 12% | -0.25 |
| Metals & mining | 12% | -0.20 |
| Real estate | 11% | -0.21 |
| Software & devices | 9% | -0.25 |
| Energy & power | 8% | -0.18 |
| Sectors | 8% | -0.18 |
| Healthcare | 6% | -0.17 |
| Financials | 4% | -0.20 |
| Indexes & ETFs | 0% | -0.19 |
| Big tech | 0% | -0.35 |
| Media & telecom | 0% | -0.25 |
| Industrials & rentals | 0% | -0.23 |
Where it helped most
Sharpe ratio gap against holding, stocks with 3+ years of history
Right now
RSI 30/70 holds 156 of 377 names as of the Oct 13, 2026 close.
Changed its call in the last two weeks:
Backtest results since 2005 (or as long as each stock has traded), against holding the same stock over the same dates, after 0.05% per switch. Past results don't promise future ones. This analysis does not constitute trading advice. Please meet with an advisor or independently review sources before making any decision.