RSI (Relative Strength Index)

What the RSI measures, what "overbought" and "oversold" really mean, and why strong stocks can stay overbought for a long time.

A momentum gauge

The Relative Strength Index, developed by J. Welles Wilder, measures the speed and size of recent price changes on a scale from 0 to 100. It compares the average size of up days with the average size of down days over a lookback period, most often 14 periods. When recent gains dominate, RSI rises; when losses dominate, it falls.

RSI is usually shown in a separate panel below the price chart.

RSI oscillates between 0 and 100. Above 70 is traditionally "overbought," below 30 "oversold."

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