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.
RSI is displayed as an oscillator (a line graph that moves between two extremes) and can have a reading from 0 to 100. Traditional interpretation and usage of the RSI are that values of 70 or above indicate that a security is becoming overbought or overvalued and may be primed for a trend reversal or corrective pullback in price. An RSI reading of 30 or below indicates an oversold or undervalued condition.
On StressTest.pro, we use a standard 14-day lookback period for RSI. While extreme readings can signal potential reversals, it is important to note that strongly trending assets can remain overbought or oversold for extended periods. RSI is best used in conjunction with other technical and fundamental signals.