What is this indicator?
Measures the current price's deviation from its statistical average and treats readings above 100 or below -100 as extreme. Besides overbought/oversold, it's also used to spot the start of new trends.
How to read the chart
The indicator moving toward the ends of its range usually signals overbought or oversold conditions; a divergence between price and the indicator is also considered an important signal.
Practical tip
Instead of trading purely off reaching an overbought or oversold zone, first check the overall trend on a higher timeframe and only take signals that align with it.