Relative Strength Index
Oscillators, RSI
- What it shows
A line between 0 and 100 that shows how strong recent gains are compared with recent losses.
- How it is built
It divides the average gain by the average loss over the period and scales the result to 0 to 100.
Default: Length 14, source close, levels 70 and 30.
- How traders read it
- Above 70 is read as overbought, below 30 as oversold.
- In a strong trend it can stay at an extreme for a long time.
- A divergence between price and RSI is read as a weakening move.
- History
Introduced in his book New Concepts in Technical Trading Systems (1978).
J. Welles Wilder Jr., 1978
Related indicators
Moving Average Convergence DivergenceStochasticStochastic RSICommodity Channel Index