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What is the RSI (Relative Strength Index)?

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Used in a sentence

With the RSI pushing above 70, analysts warned the rally was entering overbought territory.

The reader highlighted one word mid-article. Clicked explained the trading term “RSI” in plain language:

Explained in three depths

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Overview

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The RSI is a momentum gauge that runs from 0 to 100 and measures how fast and how far a price has moved recently. Readings above 70 are commonly called overbought and below 30 oversold, shorthand for a move that has been unusually strong or weak lately.

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Detail

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The math compares the average size of recent up-moves with recent down-moves, using a 14-day window as standard, and turns the result into a number between 0 and 100. Big recent up-moves push it toward 100 and big down-moves toward 0. It gets used for two things: spotting moves that have run unusually far, and spotting a mismatch called divergence, where price reaches a new high but the RSI peak comes in lower. That mismatch says the price is still rising while the push behind it is weaker. The beginner mistake is treating 70 as a sell button, because overbought means unusually fast rather than wrongly priced. In strong trends RSI can sit above 70 for weeks, so it gets read together with the trend.

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Analogy

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A car's RPM gauge. Redline means the engine is working unusually hard, not that you must stop, and a race car spends whole laps near redline. The gauge gives honest information about strain, and whether that strain is sustainable depends on the road.

AI explanations may contain errors · Not professional advice

Same facts, different vibe — Slang mode 😎

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Overview

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RSI is the "how hard has this thing been sprinting" meter, 0 to 100. Above 70 means sprinting hard, maybe too hard; below 30 means crawling, maybe done falling. It measures effort, not destiny. 😎

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Detail

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Under the hood: recent up-days versus recent down-days, mashed into one number. Rookie mistake number one is seeing 71 and smashing the sell button, because strong stocks camp above 70 for weeks — overbought means unusually fast, not illegal. The genuinely useful trick is the mismatch: price hits a new high, but RSI's high is lower than its last one. The crowd is still cheering while the engine got quieter, and that mismatch is what experienced eyes watch for. The number always gets read next to the trend, never alone. 😎

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Analogy

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It's your fitness watch yelling about heart-rate zones. Zone 5 doesn't mean stop — it means you can't hold this forever, unless you happen to be that guy. Some stocks are that guy for months.

AI explanations may contain errors · Not professional advice

Formal definition — The same term, explained the usual way

The Relative Strength Index is a bounded momentum oscillator computed from the ratio of average gains to average losses over a lookback period, conventionally 14, and scaled from 0 to 100. Readings above 70 and below 30 are customarily designated overbought and oversold, respectively. Practitioners employ RSI for identifying momentum extremes and price-momentum divergences, noting that extreme readings may persist in trending markets and are typically interpreted in conjunction with prevailing trend conditions.

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