Just got asked about RSI trading again, so let me break down what actually works with this indicator. Most people learn about RSI but don't really know how to apply it effectively. The best RSI settings depend on what you're trying to do, so here's what I've found useful.

First, the basics everyone talks about: oversold and overbought zones. When RSI dips below 30, you're looking at oversold conditions where a bounce might be coming. When it spikes above 70, things are getting stretched to the upside. The key though is waiting for confirmation before you jump in. That 50 midline matters too - above 50 usually means we're in an uptrend, below 50 suggests downtrend momentum. Simple but it works.

Now here's where best RSI settings get interesting. Instead of just watching the standard RSI 14, try comparing a faster RSI 5 against it. The short-term RSI reacts quicker to recent price action, so you catch reversals earlier. When RSI 5 crosses above RSI 14, that's bullish pressure building. When it crosses below, bearish pressure. The magic happens when you combine these crossovers with extreme RSI 5 levels - oversold below 30 or overbought above 80. That's when you get cleaner signals.

Another technique I use: drawing trendlines directly on the RSI itself. Connect the peaks and valleys on your RSI chart, just like you would on price. When the RSI trendline breaks, it often signals a move in price before it actually happens on the chart. That advance warning is valuable for timing entries.

Divergence is probably the most powerful RSI concept though. Bearish divergence shows up when price makes a higher high but RSI makes a lower high - classic reversal setup at market tops. Bullish divergence is the opposite: price lower low, RSI higher low. This usually appears before the trend actually changes direction. I've seen this work particularly well on higher timeframes like 4-hour or daily charts.

The best RSI settings aren't one-size-fits-all. Scalpers might use RSI 5, swing traders often prefer RSI 14, and some combine multiple timeframes. The point is understanding what each setting reveals about momentum, then building a system around it. Divergence trading, trendline breaks, oversold/overbought bounces - pick what resonates with your style and stick with it long enough to see results.