Welcome, Guest
Username: Password: Remember me

TOPIC: The RSI or (Relative Strength Index)

6 years 10 months ago #3327

  • KOSTOCKS007
  • KOSTOCKS007's Avatar
  • Offline
  • Junior Boarder
  • Posts: 32
  • Thank you received: 4
  • Karma: 0
A technical momentum indicator that compares the magnitude of recent gains to recent losses in an attempt to determine overbought and oversold conditions of an asset. It is calculated using the following formula:

RSI = 100 - 100/(1 + RS*)

*Where RS = Average of x days' up closes / Average of x days' down closes.

As you can see from the chart, the RSI ranges from 0 to 100. An asset is deemed to be overbought once the RSI approaches the 70 level, meaning that it may be getting overvalued and is a good candidate for a pullback. Likewise, if the RSI approaches 30, it is an indication that the asset may be getting oversold and therefore likely to become undervalued.

A trader using RSI should be aware that large surges and drops in the price of an asset will affect the RSI by creating false buy or sell signals. The RSI is best used as a valuable complement to other stock-picking tools.
Last Edit: 6 years 10 months ago by KOSTOCKS007.
The administrator has disabled public write access.

The RSI or (Relative Strength Index) 6 years 10 months ago #3326

  • KOSTOCKS007
  • KOSTOCKS007's Avatar
  • Offline
  • Junior Boarder
  • Posts: 32
  • Thank you received: 4
  • Karma: 0
The RSI or (Relative Strength Index)

An indicator that specifies overbought and oversold status for a specific stock. When the RSI reaches above 70 the stock is overbought meaning a sell off maybe near. When the RSI reaches below 30 it means the stock is oversold and a bounce is very possible sense more traders are interested in a stock at cheaper prices.
The administrator has disabled public write access.