GlossaryIntermediate

Relative Strength Index (RSI)

A momentum oscillator, scaled 0 to 100, that measures the speed and magnitude of recent price changes to flag overbought and oversold conditions.

The Relative Strength Index (RSI), developed by J. Welles Wilder, is a momentum oscillator scaled from 0 to 100, calculated from the ratio of average recent gains to average recent losses over a set period (commonly 14).

Readings above 70 are commonly discussed as an overbought condition, and below 30 as oversold, though strong trends can keep RSI in these zones for extended periods without a reversal actually following. See Kaavon's dedicated RSI article for the full calculation and its documented limitations.

Examples

RSI diverging from price — price making a new high while RSI makes a lower high — is a commonly watched, though not guaranteed, warning sign.
RSI can remain above 70 for an extended period during a strong uptrend, which is why an overbought reading alone isn't treated as an automatic sell signal.