What is RSI (Relative Strength Index)?
In one line: RSI, the Relative Strength Index, is a line from 0 to 100 that compares recent up moves with recent down moves, usually over 14 candles.
A simple example
RSI looks back over a set number of candles. 14 is the usual setting. It compares the average size of the up moves with the average size of the down moves.
Say over the last 14 candles the average gain was 1.2 and the average loss was 0.6. Divide them: 1.2 ÷ 0.6 = 2. Then RSI = 100 − (100 ÷ (1 + 2)) = 100 − 33.3 = 66.7.
Up moves have been about twice as big as down moves. So RSI sits well above the middle line of 50.
What the numbers mean
- Above 50: recent up moves have been bigger than down moves.
- Below 50: recent down moves have been bigger.
- Above 70: often called "overbought." Price has risen hard and fast.
- Below 30: often called "oversold." Price has dropped hard and fast.
More on those two zones in Overbought and oversold.
Why it matters
RSI turns "how strong is this move?" into one number. It can show when a move is getting tired, or when a Pullback inside a Trend has gone deep enough to watch.
It works best as a second opinion. The chart comes first: where price turned around, and which way the trend points. Our full walkthrough is in RSI explained.
A common mistake
Selling just because RSI is above 70. In a strong uptrend, RSI can stay above 70 for a long time while price keeps climbing. A high reading tells you the move has been strong. It doesn't tell you the move is over.
Treat RSI as a question, not an answer. "RSI is high — does the chart agree the move is tiring?"
Questions
What is the best RSI setting?
14 candles is the standard and the default on most platforms. Shorter settings react faster but give more false alarms. There's no single best one.
Does RSI work on all markets?
It can be added to any chart: stocks, forex, crypto or futures. It reads price only, so it works the same way everywhere.
Is RSI a leading or lagging indicator?
It's built from past prices, so it describes what already happened. Many people use it to spot when a move is slowing, not to predict the next one.
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