What is it?
RSI measures the speed and change of price movements to determine if an asset is overbought or oversold. It’s like a thermometer for market enthusiasm. RSI ranges from 0 to 100; above 70 is overbought, below 30 is oversold. How is it used?
  • Overbought/oversold: Sell when RSI > 70, buy when RSI < 30.
  • Divergence: If price makes new highs but RSI doesn’t, a reversal may be coming.
  • Trend confirmation: RSI above 50 supports bullish trends; below 50 supports bearish.
How is it calculated?
  • Average Gain/Loss: Calculate the average gain and loss over a period (typically 14).
  • Relative Strength (RS): Average Gain / Average Loss.
  • RSI: 100 - (100 / (1 + RS)).
RS = Average Gain / Average Loss   RSI = 100 - (100 / (1 + RS)) The above content is designed for informational purposes only, and is explicitly not investment advice. Algo Pilot is a US based technology company and not a bank, broker-dealer, or RIA. As such, Algo Pilot LLC does not provide investment advice and is not a member, SIPC. Brokerage services offered by 3rd parties are not directly affiliated with Algo Pilot LLC, and Algo Pilot users may choose the broker relationship that they desire.