What Is RSI?

RSI (Relative Strength Index) is a technical indicator calculated from the ratio of price gains to price losses over a set period, used to gauge how overheated a market is (overbought or oversold).

What the Indicator Shows

RSI is displayed on a scale from 0% to 100%. Readings above 70% are sometimes treated as a guideline for "overbought" conditions, and readings below 30% for "oversold" conditions. Because it is calculated from the ratio of price gains to losses, it is used to gauge which direction market momentum is leaning toward.

How to Read It, and What to Watch Out For

RSI levels are only one guideline for gauging overheated conditions — figures such as 70% or 30% cannot be treated as absolute trading signals. During a strong, sustained trend, the price can continue moving while RSI stays pinned at overbought or oversold levels, so it is common to make an overall judgment alongside other indicators.

This article is provided for general informational purposes only and does not recommend or solicit the purchase or sale of any specific investment method or security. Final investment decisions are your own responsibility.

Frequently Asked Questions

If RSI goes above 70%, will the price definitely fall?
RSI above 70% is sometimes treated as a rough guideline for "overbought" conditions, but it is not unusual for the price to keep rising even after crossing that level. RSI alone cannot be used to determine trade timing with certainty.
How many days is RSI usually calculated over?
A 14-day period is common, though other periods such as 9 or 25 days are sometimes used depending on the purpose.