1. What is the RSI?

The Relative Strength Index (RSI) is a momentum oscillator that measures the speed and change of price movements. It oscillates between 0 and 100 and is typically used to identify overbought or oversold conditions in trading.

2. How Does the Calculator Work?

The calculator uses the RSI formula:

Where:

• Average Gain — Sum of gains over the period divided by number of periods
• Average Loss — Sum of losses over the period divided by number of periods
• Periods — Typically 14 days for standard RSI calculation

Explanation: The RSI compares the magnitude of recent gains to recent losses to determine overbought (typically >70) and oversold (typically <30) conditions.

3. Importance of RSI Calculation

Details: RSI is crucial for technical traders to identify potential trend reversals, confirm price movements, and spot divergence between price and momentum.

4. Using the Calculator

Tips: Enter the total gains (up moves) and losses (down moves) over your selected period. The standard period is 14, but traders often adjust this (9 for shorter-term, 25 for longer-term analysis).

5. Frequently Asked Questions (FAQ)

Q1: What are typical RSI thresholds?
A: Generally, RSI above 70 indicates overbought conditions, while below 30 indicates oversold. These can be adjusted to 80/20 for stronger trends.

Q2: How many periods should I use?
A: The standard is 14 periods, but shorter periods (9) make RSI more sensitive, while longer periods (25) make it smoother.

Q3: Can RSI be used for all time frames?
A: Yes, but interpretation varies. Intraday traders use shorter periods, while long-term investors may prefer weekly/monthly charts with standard periods.

Q4: What's the difference between RSI and Stochastic?
A: Both are momentum oscillators, but RSI compares gains to losses while Stochastic compares closing price to price range over a period.

Q5: How reliable is RSI alone?
A: RSI works best when combined with other indicators and price action analysis, as false signals can occur in strong trending markets.