Relative Strength Index (RSI)
Momentum oscillator (0–100) that flags overbought conditions above 70 and oversold below 30 over a default 14-period lookback.
Formula
RSI = 100 − 100 / (1 + RS), RS = avg gain over n periods / avg loss over n periods
RSI compares average up-closes to average down-closes over a rolling window (default 14 periods), producing a bounded score between 0 and 100. Readings above 70 signal the asset may be overbought; below 30, oversold.
Traders also watch for divergence: price making a new high while RSI fails to confirms warns of weakening momentum. Centreline (50) crossovers work as a trend-continuation filter. RSI is one of the most versatile tools in a trader's kit — usable on any timeframe, any market.
Example
A stock rallies for three weeks, pushing RSI to 74 on the daily chart. Price then prints a marginally higher high, but RSI makes a lower high (bearish divergence). A short-side entry triggers on the next bearish candle close, with a stop above the swing high.
Related Terms
Commodity Channel Index (CCI)
Oscillator measuring how far price deviates from its statistical mean; above +100 is strong momentum, below −100 suggests oversold.
IntermediateCoppock Curve
Long-term momentum oscillator that sums a 14- and 11-month ROC then smooths with a 10-period WMA; designed to identify major bear market lows.
AdvancedMACD
Trend-following momentum indicator built from the difference between a 12- and 26-period EMA, with a 9-period signal line and histogram.
BeginnerMomentum Indicator
Measures the absolute change in price over n periods; positive and growing values confirm trend strength, declining values warn of exhaustion.
BeginnerMoney Flow Index (MFI)
Volume-weighted RSI that measures buying and selling pressure; above 80 is overbought, below 20 oversold, over a 14-period default.
IntermediateRate of Change (ROC)
Percent change between the current close and the close n periods ago; positive values confirm upward momentum, negative values confirm selling pressure.
BeginnerStochastic Oscillator
Momentum oscillator comparing a closing price to its high-low range over 14 periods; values above 80 are overbought, below 20 oversold.
BeginnerStochastic RSI
RSI of RSI — applies the Stochastic formula to RSI values for a hyper-sensitive oscillator that generates more signals than either parent indicator.
IntermediateUltimate Oscillator
Momentum oscillator that averages buying pressure across 7-, 14-, and 28-period timeframes to reduce false signals from a single period.
IntermediateWilliams %R
Inverted Stochastic oscillator (0 to −100) identifying overbought (above −20) and oversold (below −80) conditions over a 14-period window.
Beginner