What Is the Relative Strength Index (RSI)?
The Relative Strength Index (RSI) is a momentum oscillator developed by J. Welles Wilder in 1978. It measures the speed and magnitude of price changes and oscillates between 0 and 100. It's one of the most widely used technical indicators by traders worldwide.
How RSI Is Calculated
RSI compares the average gains to average losses over a lookback period — typically 14 periods. The formula is:
RSI = 100 – (100 / (1 + RS))
Where RS = Average Gain / Average Loss over the lookback period.
Reading RSI Values
Above 70 — Overbought: The asset may be overvalued and due for a pullback. This doesn't mean sell immediately — assets can remain overbought for extended periods in strong uptrends.
Below 30 — Oversold: The asset may be undervalued and due for a bounce. Again, this is a signal to watch, not an automatic buy.
50 Midline: The RSI crossing above 50 signals bullish momentum; crossing below 50 signals bearish momentum.
RSI Divergence
One of the most powerful RSI signals is divergence. Bullish divergence occurs when price makes a lower low but RSI makes a higher low — suggesting weakening bearish momentum. Bearish divergence is the opposite: price makes a higher high while RSI makes a lower high.
Common RSI Trading Strategies
Overbought/Oversold Reversals: Wait for RSI to dip below 30 then cross back above it as a buy signal. Exit when RSI reaches 70.
RSI Trend Following: In strong uptrends, RSI often stays between 40–90. Use pullbacks to the 40–50 zone as buying opportunities.
RSI + Support/Resistance: Combine RSI signals with price support or resistance zones for higher-probability trades.
RSI on TradeProview
On TradeProview's Evidence Lab, RSI appears only when sufficient observed closes are available. It is shown beside provider facts, the disclosed evidence score and a direct handoff into virtual paper practice.
Note: RSI is an educational tool. It's not financial advice. Always manage your risk before any trade.