What is the RSI and how does it work?

The basic idea behind the RSI is to measure how quickly traders are bidding the price of the security up or down. The RSI plots this result on a scale of 0 to 100.

What does RSI stand for?

The relative strength index (RSI) is a momentum indicator used in technical analysis that measures the magnitude of recent price changes to evaluate overbought or oversold conditions in the price...

How to calculate RSI?

To calculate RSI even more precisely, you can use previous averages when determining current average gain or loss: RSI values above 70 indicates that an asset is becoming overbought and the market is bullish, while an RSI reading below 30 indicates that an asset is becoming oversold and the market is bearish.

How many periods do you use to calculate RSI?

The standard is to use 14 periods to calculate the initial RSI value. For example, imagine the market closed higher seven out of the past 14 days with an average gain of 1%. The remaining seven days all closed lower with an average loss of -0.8%.