Trends/Momentum oscillators

Relative strength index

A 0 to 100 number comparing the size of recent gains with the size of recent losses.

Momentum oscillatorsBest on 3M, 6M, 1YAlso called RSI

Illustration of the relative strength index shape. It is a sketch, not real price data.

What it shows

J. Welles Wilder's RSI compares the average gain on up bars with the average loss on down bars over the last 14 bars. The result is scaled between 0 and 100. A high value means gains have outweighed losses recently. A low value means the reverse.

Readings above 70 and below 30 are the common reference lines. They describe how one-sided recent moves have been, not what comes next.

How we find it

The same code that draws it on your chart follows these steps, with the same result every time.

Over 14 bars, average the gains and average the losses (Wilder smoothing).
RS = average gain ÷ average loss.
RSI = 100 − 100 ÷ (1 + RS).
Plot it under the price with lines at 30 and 70.

Starting values: Length 14; Upper line 70; Lower line 30. These are proposed and will be tuned on real price data before launch.

How to read it

The panel shows RSI from 0 to 100.
Dashed lines mark 70 and 30.
A reading above 70 means recent gains dominated.

Status labels you may see

Label	What it means
Above 70	RSI is above 70.
Between 30 and 70	RSI is in the middle zone.
Below 30	RSI is below 30.

What cancels it

Nothing cancels it.

What traders check next

How long RSI stayed above 70 or below 30 before.
Whether RSI and price agree on highs and lows.
The trend of the price itself.

Limits

In strong trends RSI can stay above 70 or below 30 for long stretches.
The 70 and 30 lines are conventions.
It lags a little because of smoothing.

Try it in forecastviz

Open any ticker and choose Momentum oscillators → Relative strength index in the left menu.
Switch between 3M, 6M, 1Y to see how the picture changes.
Compare with RSI divergence and Stochastic oscillator on the same chart.

Open on a ticker

Questions

Does above 70 mean the stock will fall?

No. It means recent gains were large compared with recent losses.

Why 14?

It is Wilder's original setting.