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Relative Strength Index

RSI

The Relative Strength Index (RSI) is one of the most popular momentum oscillators. It measures the speed and magnitude of recent price changes to evaluate overbought or oversold conditions. RSI oscillates between 0 and 100, with readings above 70 typically indicating overbought conditions and below 30 indicating oversold conditions.

Interactive Chart

65.87
RSI

Parameters

Number of periods to calculate RSI. Standard is 14.

Current Reading

Oversold
Neutral
Overbought
0305070100
65.9Neutral

Quick Answer

Measures speed and magnitude of price changes on a 0-100 scale. ![RSI indicator on price chart](https://images.unsplash.com/photo-1611974789855-9c2a0a7236a3?w=800 "RSI oscillates between 0 and 100") RSI was developed by J. Welles Wilder Jr.

Trading Signals

Overbought

Bearish

RSI crosses above 70, suggesting potential selling pressure

RSI > 70

Oversold

Bullish

RSI crosses below 30, suggesting potential buying opportunity

RSI < 30

Bullish Divergence

Bullish

Price makes lower low but RSI makes higher low

Price ↓, RSI ↑

Bearish Divergence

Bearish

Price makes higher high but RSI makes lower high

Price ↑, RSI ↓

What is RSI?

RSI indicator on price chart
RSI oscillates between 0 and 100

RSI was developed by J. Welles Wilder Jr. and introduced in his 1978 book. It compares the magnitude of recent gains to recent losses to determine if an asset is overbought or oversold. The indicator ranges from 0 to 100, with extreme readings suggesting potential reversal points.

How to Read RSI

RSI above 70 suggests the asset may be overbought and due for a pullback. RSI below 30 suggests it may be oversold and due for a bounce.

Warning

During strong trends, RSI can remain in overbought/oversold territory for extended periods. Look for divergences between price and RSI for stronger signals.

Trading Signals

Common RSI signals include: overbought/oversold crossovers, centerline crossovers (above/below 50), and divergences.

Pro Tip

Bullish divergedivergence when price makes lower lows but RSI makes higher lows. Bearish divergence is the opposite - these are often the most reliable signals.

Trading Strategies

One popular strategy is to wait for RSI to enter oversold territory, then buy when it crosses back above 30. For shorts, wait for overbought, then sell when it crosses below 70.

Note

Combine with trend antrends for better results - only take long signals in uptrends.

Formula

Formula
RSI = 100 - (100 / (1 + RS))
RS = Average Gain / Average Loss

Tips & Common Mistakes

Pro Tips

  • •Use longer periods (21+) for less noise and fewer signals
  • •Adjust overbought/oversold levels in trending markets (80/20)
  • •Look for RSI divergences for high-probability setups
  • •Combine with price action for confirmation

Common Mistakes

  • •Selling just because RSI is overbought in a strong uptrend
  • •Using RSI alone without considering the overall trend
  • •Using very short periods which create too much noise
  • •Ignoring divergences which are often the strongest signals

Best Used With

Moving AveragesSupport/ResistanceVolume
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