RSI at 78 on a strong Nasdaq trend day is not a sell signal. It is a market telling you, correctly, that buyers have been in firm control for the measured period, and a genuinely strong trend can hold RSI above 70 for hours while price keeps climbing. Traders who short the first overbought reading in a real trend usually get run over by exactly the momentum the indicator was accurately describing.
What the number actually measures
RSI compares the size of recent up moves to the size of recent down moves over a chosen period, 14 by default, and expresses the ratio on a 0 to 100 scale. It is a momentum reading, not a price level and not a prediction. A high RSI means recent gains have dominated recent losses, nothing more. It carries no built-in claim about what happens next, which is exactly where the common misreading, treating 70 as an automatic sell and 30 as an automatic buy, gets traders into trouble.
Extended readings during a real trend
In a strong trend, momentum is supposed to stay high; that is what a trend is. EURUSD rallying from 1.0800 to 1.0900 in a clean, sustained push can easily hold RSI between 65 and 85 for the entire move, with plenty of countertrend traders fading it the whole way and losing on each attempt. The overbought reading only earns real weight as a fade signal in a market that is ranging, not trending, because in a range momentum extremes genuinely tend to mean-revert. Confusing the two regimes is the single biggest reason RSI gets a reputation as unreliable, when the actual problem is applying a range tool to a trending market.
The readings that hold up better
Two RSI behaviors carry more honest signal than the raw overbought and oversold levels. Divergence, where price makes a new high but RSI makes a lower high, flags fading momentum behind a continuing price move and deserves attention, particularly near a known resistance level, though it is a warning to tighten management, not an automatic reversal trigger. The second is a shift in RSI's own range: in an uptrend, RSI often oscillates between 40 and 80 rather than the textbook 30 to 70, and pullbacks that hold RSI above 40 rather than dropping into the low 30s are a tell that the trend's momentum floor has risen, useful confirmation for staying in pullback longs rather than fading them.
A worked example
Gold trending from 2,380 to 2,420 over three sessions holds RSI in a 45 to 75 band the entire way, never touching oversold. A pullback to 2,405 drops RSI to 48, still well above the 30 line a range trader would want to see before fading, and price resumes higher within the session. A trader reading RSI as a regime tool sees the raised floor and treats the pullback as a trend continuation opportunity; a trader waiting for classic oversold never gets the signal at all, because in this trending regime it was never coming.