The relative strength index (RSI) is a technical indicator used in the analysis of financial markets. It is intended to chart the current and historical strength or weakness of a stock or market based on the closing prices of a recent trading period. The indicator should not be confused with relative strength.
The RSI is classified as a momentum oscillator, measuring the velocity and magnitude of directional price movements. Momentum is the rate of the rise or fall in price. The RSI computes momentum as the ratio of higher closes to lower closes: stocks which have had more or stronger positive changes have a higher RSI than stocks which have had more or stronger negative changes.
The RSI is most typically used on a 14 day timeframe, measured on a scale from 0 to 100, with high and low levels marked at 70 and 30, respectively. Shorter or longer timeframes are used for alternately shorter or longer outlooks. More extreme high and low levels—80 and 20, or 90 and 10—occur less frequently but indicate stronger momentum.
The relative strength index was developed by J. Welles Wilder and published in a 1978 book, New Concepts in Technical Trading Systems, and in Commodities magazine (now Futures magazine) in the June 1978 issue. It has become one of the most popular oscillator indices.
Read more about Relative Strength Index: Calculation, Cutler's RSI
Famous quotes containing the words relative, strength and/or index:
“Are not all finite beings better pleased with motions relative than absolute?”
—Henry David Thoreau (1817–1862)
“Today, supremely, it behooves us to remember that a nation shall be saved by the power that sleeps in its own bosom; or by none; shall be renewed in hope, in confidence, in strength by waters welling up from its own sweet, perennial springs. Not from above; not by patronage of its aristocrats. The flower does not bear the root, but the root the flower.”
—Woodrow Wilson (1856–1924)
“Exile as a mode of genius no longer exists; in place of Joyce we have the fragments of work appearing in Index on Censorship.”
—Nadine Gordimer (b. 1923)