The relative strength index (RSI) is a technical analysis indicator that examines the size of recent price fluctuations to determine if a stock or other asset is overbought or oversold. The RSI is represented by an oscillator (a line graph that travels between two extremes) with a range of 0 to 100. J. Welles Wilder Jr. created the indicator and published it in his important 1978 book "New Concepts in Technical Trading Systems."
Values of 70 or higher on the RSI, according to traditional interpretation and usage, signal that an investment is becoming overbought or overvalued, and may be ready for a trend reversal or corrective retreat in price. A reading of 30 or less on the RSI suggests that the market is oversold or undervalued.
TAKEAWAYS IMPORTANT
The relative strength index (RSI), which was created in 1978, is a prominent momentum oscillator.
The RSI, which is commonly charted beneath the graph of an asset's price, offers technical traders with clues concerning bullish and bearish price momentum.
When the RSI is above 70%, an asset is deemed overbought, and when it is below 30%, it is considered oversold.