A 0–100 gauge of how strong recent gains have been against recent losses, over 14 days. Above 70 is conventionally called overbought; below 30, oversold.
The RSI, devised by J. Welles Wilder, compares the average size of up days with the average size of down days over 14 periods. A run of strong gains pushes it towards 100; a run of losses towards 0.
Why it matters
Extreme readings show that a move has been fast, not that it must reverse. In strong trends RSI can stay above 70 or below 30 for long periods. Used with the trend, it helps time entries; used alone, it is unreliable.
