What does the Relative Strength Index (RSI) indicate when it is less than 30?

The Relative Strength Index (RSI) is a momentum oscillator that measures the speed and change of price movements. An RSI value less than 30 typically indicates that an asset is considered oversold, suggesting that it may have been sold too aggressively and is likely to rebound. In terms of market psychology, a very low RSI can signify that the selling pressure has been excessive, and there might be potential for a price increase as buyers begin to see value at lower levels.

Investors and traders often interpret an RSI below 30 as a buy signal, marking an opportunity to enter a position when the market is undervaluing an asset. This strategy assumes that corrections in market sentiment may lead to a price recovery, making the asset attractive for purchase.

The context provided indicates a divergence between most interpretations of technical indicators and the core message of the RSI when it falls below this threshold. The other options do not align with the conventional understanding of the RSI's implications, which focus on periods of overselling rather than signaling the need for increased caution or selling.