RSI Indicator (Relative Strength Index)

The Relative Strength Index (RSI) is a momentum oscillator that measures the speed and size of recent price changes on a scale from 0 to 100. It was introduced by J. Welles Wilder Jr. in 1978.

Neutral explainer. This page explains how the indicator is calculated and read. Indicators are derived from past prices and don’t predict the future on their own.

How RSI is calculated

RS  = Average gain ÷ Average loss   (over 14 periods by default)
RSI = 100 − 100 ÷ (1 + RS)

Gains and losses are the up and down moves between closes. Wilder’s method smooths the averages: after the first 14-period average, each new average = (previous average × 13 + current value) ÷ 14. If there were only gains, RSI is 100; only losses, 0; equal average gains and losses, 50.

How traders read RSI

Settings

The default length is 14. Shorter lengths make RSI more sensitive and reach the extremes more often; longer lengths make it smoother. Some traders use 80/20 instead of 70/30 to filter out more readings.

Adding RSI on TradingView

Click Indicators, search for Relative Strength Index, and it opens in a pane below the chart with the 70 and 30 bands drawn. Open its settings to change the length or add a smoothing moving average. How many indicators you can add at once depends on your plan: see TradingView indicator limits.

Related momentum indicators: stochastic oscillator and MACD.

Educational explanation only. ChartWatch is independent and doesn’t give trading or investment advice. Trading carries a risk of loss.

FAQ

What is the RSI indicator?
A momentum oscillator from 0 to 100 that compares the size of recent gains with recent losses, by default over 14 periods.
What do RSI 70 and 30 mean?
Above 70 is traditionally considered overbought and below 30 oversold. In strong trends RSI can stay at these levels for a long time.
How is RSI calculated?
RSI = 100 − 100 ÷ (1 + RS), where RS is the average gain divided by the average loss over the period, smoothed with Wilder's method.
Who created the RSI?
J. Welles Wilder Jr., in his 1978 book New Concepts in Technical Trading Systems.

More free TradingView tools

MACD IndicatorMACD line, signal line and histogram. Stochastic Oscillator%K, %D and the formula explained. Indicators GuideIndicator limits on each plan, plus favorites and templates. Moving AverageSMA vs EMA and how they're calculated.
TradingView — the fastest way to follow markets
Watchlist BuilderAll GuidesWatchlist GuideTradingView PlansIndicatorsShortcutsBar ReplayAlert BuilderPine ColorsWatchlist CleanerCalculatorsWorld Market HoursForex HoursStock Market HoursMarket HolidaysFed Meeting DatesCPI & NFP DatesPosition Size CalculatorCandlestick PatternsChart PatternsChart ColorsSymbol FormatAboutPrivacyTermsContact

ChartWatch is an independent tool and is not affiliated with, endorsed by, or officially connected to TradingView, Inc. “TradingView” is a trademark of its respective owner. Exchange, broker and platform names are trademarks of their respective owners.