Calculation
For each trading period an upward change U or downward change D is calculated. Up periods are characterized by the close being higher than the previous close:
Conversely, a down period is characterized by the close being lower than the previous period's (note that D is nonetheless a positive number),
If the last close is the same as the previous, both U and D are zero. The average U and D are calculated using an n-period exponential moving average (EMA) in the AIQ version (but with an equal-weighted moving average in Wilder's original version). The ratio of these averages is the relative strength or relative strength factor:
If the average of D values is zero, then the RSI value is defined as 100.
The relative strength factor is then converted to a relative strength index between 0 and 100:
The exponential moving averages should be appropriately initialized with a simple average using the first n values in the price series.
Read more about this topic: Relative Strength Index
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