What Is the RSI Indicator? How to Read It and What to Watch For

The RSI (Relative Strength Index) is a momentum indicator that shows, on a scale from 0 to 100, how strong an asset's recent gains have been compared with its recent losses. It is one of the most used indicators on stock, gold, crypto and currency charts.

How is the RSI calculated?

The standard setting is 14 periods (14 days, 14 hours and so on). The average gain over the last 14 candles is divided by the average loss (RS) and converted to a 0-100 scale:

RSI = 100 − 100 / (1 + RS)

When the average gain is much larger than the average loss the RSI moves toward 100, and the other way round toward 0.

What do 30 and 70 mean?

• Above 70: the rise is strong or the price has climbed a lot in a short time. Classically called "overbought".
• Below 30: the fall is strong or the price has dropped a lot in a short time. "Oversold".
• Around 50: the balanced zone. Staying above 50 usually goes with an uptrend, staying below with a downtrend.

Common mistakes

1. "It hit 70, so sell." In strong trends the RSI can stay above 70 for weeks. On its own it is not a reason to sell.
2. Deciding on one indicator. Read the RSI together with the trend (moving averages), volume and the MACD.
3. Forgetting costs. If you trade often on RSI signals, commission and slippage change the result a lot. See commissions and slippage in backtests.
4. Assuming what worked will keep working. Every indicator works in some markets and periods and fails in others.

See the RSI on live data

On the ApolloHelix Market Analysis page, the RSI, MACD, volume and trend readings of the tracked assets are listed, and the stock screener covers the most liquid NASDAQ and Borsa Istanbul stocks. They describe past price action; they are not buy or sell advice.

To measure whether the RSI really helps in a strategy, read the backtesting and paper trading guide.

This article is educational and not investment advice. Past results do not guarantee future results.