RSI (Relative Strength Index) — Complete Reference
Momentum oscillator measuring the speed of recent price changes on a 0-100 scale.
What RSI actually measures
RSI (Relative Strength Index), developed by J. Welles Wilder in 1978, measures the magnitude of recent gains relative to recent losses over a lookback period. The math: RSI = 100 − 100/(1 + RS), where RS = average gain / average loss over the period (typically 14 candles).
Standard RSI settings
The default 14-period setting is what virtually every charting platform uses out of the box. Day traders often shorten it to 7 or 9 for more responsive signals; long-term investors sometimes extend to 21+ for smoother readings. The setting changes signal frequency but not the underlying math.
Reading RSI levels
Conventional thresholds: above 70 = overbought, below 30 = oversold. Critically, these are NOT timing signals — in strong trends, RSI can stay above 70 (or below 30) for weeks while price continues moving. Use thresholds to identify probability-weighted setups, not predictions.
RSI divergence — the most reliable signal
Bullish divergence: price makes a new low while RSI makes a higher low. Bearish divergence: price makes a new high while RSI makes a lower high. Divergence often precedes trend pauses or reversals — it's the strongest single RSI signal. False signals exist but rates are notably better than naive threshold crosses.
Where RSI fails
Trending markets. In a strong uptrend, RSI parks above 70 for extended periods; in a strong downtrend, it parks below 30. Using overbought/oversold thresholds in trends is the #1 way RSI loses money. Combine with a trend filter (ADX, moving-average alignment) before acting on extreme RSI readings.
Building a workflow around RSI
A solid framework: use RSI for entry timing within a confirmed trend. Trend = price above 50-EMA AND 50-EMA above 200-EMA. Enter long when RSI dips to 40-45 (not 30 — that requires a serious correction). Stop below the swing low; target the prior high.
RSI on different timeframes
Daily RSI for swing trades, hourly for intraday entries, weekly for long-term regime. Higher-timeframe RSI sets the regime; lower-timeframe RSI times the entry. Trading against the higher-timeframe RSI direction is documented to lose long-term.
Free RSI tools and scanners
SultraxAI scans ~100 stocks and 12 cryptos in real time with RSI as one input among many. We publish back-checked win rates on RSI-driven signals. Try it free →