Answer Capsule: RSI = 100 - (100/(1+RS)) where RS = Avg Gain / Avg Loss over 14 periods. Above 70 = overbought, below 30 = oversold. The most powerful RSI signal is divergence between price and RSI.
RSI = 100 - (100/(1+RS)) where RS = Avg Gain / Avg Loss over 14 periods. Above 70 = overbought, below 30 = oversold. The most powerful RSI signal is divergence between price and RSI.
Relative Strength Index — Wilder's RSI. Identify overbought (>70) and oversold (<30) conditions. The most popular momentum oscillator.
Overbought (>70) — Price may be overextended upward. Potential sell signal. BUT in strong trends, RSI can stay overbought for extended periods.
Oversold (<30) — Price may be oversold. Potential buy signal. Don't buy just because RSI is low — wait for confirmation.
Divergence (Strongest Signal) — Price makes higher high but RSI makes lower high = bearish divergence (sell). Price makes lower low but RSI makes higher low = bullish divergence (buy).
Centerline Crossover — RSI crossing above 50 = bullish momentum. Crossing below 50 = bearish momentum.
Real-time RSI overlay on professional charts. Sub-50ms data means you see the signal before others.
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