Forex Glossary

Relative Strength Index (RSI)

The Relative Strength Index (RSI) is a technical analysis indicator used in the financial markets to measure the strength of price movements of a security or asset over a certain period of time. The RSI is calculated using the average gain and loss of an asset over a given period, typically 14 days, and ranges from 0 to 100.

The RSI is used by traders to identify potential overbought or oversold conditions in the market. If the RSI is above 70, it is considered overbought, and if it is below 30, it is considered oversold. Overbought conditions suggest that the asset may be due for a price correction, while oversold conditions may suggest that the asset is undervalued and may be due for a price increase.

The RSI is a popular indicator for technical analysts and is commonly used in conjunction with other technical indicators and chart patterns to make trading decisions. It is important to note that like all technical indicators, the RSI is not perfect and should be used in combination with other forms of analysis to make informed trading decisions.

 

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