|Definition||:||Relative Strength Index|
|Category||:||Business » Stock Market|
What does RSI mean?
Relative Strength Index (RSI) is an indicator used in the technical analysis of financial instruments. RSI was developed by J. Welles Wilder to measure the speed and change of price movements. RSI scale ranges from a low value of zero to a high value of 100. RSI value of 30 or less is a signal that security is undervalued and RSI value of 70 or greater are viewed as a sign that security is becoming overvalued. Or in other words, RSI is considered oversold when below 30 and overbought when above 70.
RSI = 100 - [100/(1+RS)]
Relative Strength (RS) for the defined period = Average Gain / Average Loss. The default period used for the RSI calculation is 14.
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