Relative strength index (RSI)

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    The relative strength index (RSI) is a technical indicator used to indicate when market conditions are overbought or oversold. When these signals occur, a trader can use them to look for pullbacks or reversals.

    It is calculated by averaging the number of up and down periods, as a way of showing the underlying relative strength.

    When the RSI reaches 30, it signals an “oversold” market

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    When the RSI reaches 70, it signals an “overbought” market.

    The RSI indicator is usually displayed underneath a chart pattern for clearer analysis.

    RSI

    Further reading

    To learn more about the RSI and how other indicators help determine price action, visit:

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