RSI Calculator — Relative Strength Index
Use our free Rsi Calculator to plan your technical analysis strategy. Get detailed breakdowns, charts, and actionable insights.
RSI Calculator — Relative Strength Index
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Formula: RSI = 100 - (100 / (1 + RS)) where RS = Average Gain / Average Loss
Worked example — RSI = 60.00 (Bullish Momentum - above 50 centerline, below overbought 70)
Formula
RSI = 100 - (100 / (1 + RS)) where RS = Average Gain / Average Loss
The Relative Strength (RS) is the ratio of the average upward price change to the average downward price change over the lookback period. RSI normalizes this ratio to a 0-100 scale. Values above 70 indicate overbought conditions, below 30 indicate oversold.
Worked Examples
Example 1: Standard RSI Calculation (14-period)
Problem:Over the last 14 periods, the average gain is 1.20 and the average loss is 0.80. Calculate the RSI value.
Solution:RS = Average Gain / Average Loss = 1.20 / 0.80 = 1.50 RSI = 100 - (100 / (1 + RS)) RSI = 100 - (100 / (1 + 1.50)) RSI = 100 - (100 / 2.50) RSI = 100 - 40.00 = 60.00
Result:RSI = 60.00 (Bullish Momentum - above 50 centerline, below overbought 70)
Example 2: Oversold RSI Signal
Problem:A stock shows average gain of 0.30 and average loss of 1.50 over 14 periods. Interpret the RSI.
Solution:RS = Average Gain / Average Loss = 0.30 / 1.50 = 0.20 RSI = 100 - (100 / (1 + 0.20)) RSI = 100 - (100 / 1.20) RSI = 100 - 83.33 = 16.67 RSI below 30 = Oversold territory RSI below 20 = Extremely oversold
Result:RSI = 16.67 (Extremely Oversold - strong potential buy signal, watch for reversal confirmation)
Frequently Asked Questions
What is the Relative Strength Index (RSI) and how is it calculated?
The Relative Strength Index (RSI) is a momentum oscillator developed by J. Welles Wilder Jr. in 1978 that measures the speed and magnitude of price changes on a scale from 0 to 100. The RSI is calculated using the formula RSI equals 100 minus 100 divided by 1 plus RS, where RS (Relative Strength) is the average gain divided by the average loss over a specified period, typically 14 periods. The average gain is calculated by summing all upward price changes over the lookback period and dividing by the period length. The average loss uses the same method for downward changes. After the initial calculation, a smoothed moving average is applied using the formula: new average equals previous average times 13 plus current value, all divided by 14.
What do overbought and oversold RSI levels mean for trading?
Traditional RSI interpretation considers readings above 70 as overbought and readings below 30 as oversold. An overbought reading suggests that the asset has experienced strong upward momentum and may be due for a pullback or consolidation, potentially signaling a sell opportunity. An oversold reading indicates strong downward momentum and a potential buying opportunity as the price may bounce. However, during strong trending markets, RSI can remain overbought or oversold for extended periods. In a strong uptrend, RSI may stay between 40 and 90, while in a strong downtrend it may range between 10 and 60. Many experienced traders adjust these levels to 80/20 in trending markets for more reliable signals.
What is RSI divergence and why is it important for traders?
RSI divergence occurs when the price movement and the RSI indicator move in opposite directions, potentially signaling a trend reversal. Bullish divergence happens when price makes a lower low while RSI makes a higher low, suggesting waning selling pressure and a potential upward reversal. Bearish divergence occurs when price makes a higher high while RSI makes a lower high, indicating weakening buying momentum and a potential downward reversal. Hidden divergence works in the opposite direction and confirms trend continuation rather than reversal. Divergence is considered one of the most powerful RSI signals because it reveals underlying momentum shifts before they become apparent in price action, giving traders an early warning of potential trend changes.
What RSI period length should I use for different trading timeframes?
The default 14-period RSI works well for most applications, but different timeframes benefit from adjustments. For day trading on 1 to 15 minute charts, shorter periods of 7 to 10 produce more responsive signals that capture quick momentum shifts, though they generate more false signals. For swing trading on daily charts, the standard 14-period balances responsiveness with reliability. For longer-term position trading on weekly charts, periods of 14 to 21 smooth out noise and provide more reliable signals. Some traders use multiple RSI periods simultaneously, such as a 7-period for entry timing and a 14-period for trend confirmation. Shorter periods make the RSI more volatile and reactive while longer periods create smoother readings that filter out short-term fluctuations.
How should RSI be combined with other technical indicators for best results?
RSI is most effective when used in conjunction with complementary technical indicators rather than in isolation. Combining RSI with moving averages provides trend context: only take RSI buy signals when price is above the 200-day moving average and sell signals when below it. MACD (Moving Average Convergence Divergence) confirms RSI momentum signals when both indicators agree on direction. Bollinger Bands combined with RSI help identify overextended price moves when RSI is extreme and price touches or exceeds the bands. Volume confirmation strengthens RSI signals because reversals accompanied by increasing volume are more reliable. Support and resistance levels provide price targets and entry points when RSI signals align with key chart levels. This multi-indicator approach significantly reduces false signals compared to using RSI alone.
Why does the same RSI period give different values on different platforms?
Wilder's original RSI smooths the average gain and average loss with a modified moving average that weights the newest bar 1/14 and carries 13/14 of the previous average forward. Some platforms substitute a simple moving average — known as Cutler's RSI — or a standard EMA weighted 2/(n+1). The readings drift apart, most visibly across the first few dozen bars, because the seed value works out of the series slowly. Only compare RSI figures from charts using the same smoothing.
What does the RSI 50 centreline actually tell you?
RSI equals exactly 50 when the average gain matches the average loss, since RS is then 1 and 100 − 100/(1+1) = 50. Readings that stay above 50 mean up-closes have dominated the lookback in magnitude, not merely in count. Many traders use the centreline as a trend filter rather than trading the 30/70 extremes, taking longs only while RSI holds above 50, because firm uptrends tend to bottom nearer 40 than 30.
Can RSI actually reach 0 or 100?
It can, but only at the boundary of the inputs. RSI prints 100 when the average loss across the lookback is zero — no period in the window closed lower — because RS becomes infinite and the 100/(1 + RS) term collapses to zero. It prints 0 when the average gain is zero. Neither reading is a signal by itself; it simply says the window holds no counter-trend closes, which happens on gap-driven runs and thin instruments.
What is the difference between RSI and Stochastic RSI?
RSI measures price against its own recent gains and losses. Stochastic RSI applies the stochastic formula to the RSI series itself: current RSI minus the lowest RSI in the lookback, divided by the range between the highest and lowest RSI in that window. The output swings to its 0 and 100 bounds far more often than RSI does, which makes it better at timing pullback entries inside an established trend than at calling reversals.
How does RSI differ from comparative relative strength?
The shared name hides two different measurements. RSI is an internal momentum oscillator: it compares an instrument only with its own recent closes and is bounded between 0 and 100. Comparative relative strength divides one instrument's price by another, usually a benchmark index, producing an unbounded ratio line that shows which of the two is outperforming. Use RSI to time entries within a chart, and the ratio line to choose between instruments.
References
Reviewed for accuracy by Daniel Agrici, Founder & Lead Developer · Editorial policy
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