Relative Strength Index (RSI)
📈 Investing
Quick Definition
The Relative Strength Index (RSI) is a momentum oscillator that measures the speed and change of price movements, typically used to identify overbought or oversold conditions in a market.
Formula
RSI = 100 - (100 / (1 + RS)) where RS = Average Gain / Average LossExamples
- 1A stock with an RSI above 70 might be considered overbought, suggesting a potential sell signal.
- 2An RSI below 30 might indicate that a stock is oversold, potentially representing a buying opportunity.
- 3During a strong uptrend, an RSI might remain above 70 for an extended period, indicating sustained buying interest.
- 4Traders might use RSI divergences, where the RSI trend differs from the price trend, as signals for potential price reversals.
Tags
RSImomentum-oscillatortrading-indicatorstock-markettechnical-analysis
Related Terms
Other terms you might find helpful
Stochastic Oscillator
The Stochastic Oscillator is a momentum indicator used in technical analysis that compares a particular closing price of a security to a range of its prices over a certain period of time.
Technical Analysis
Technical analysis is a method used to evaluate and predict future prices of securities based on historical price and volume data.
Quick Info
Category:Investing
Difficulty:intermediate
Last Updated:6/20/2025