Relative Strength Index (RSI)
A momentum oscillator that measures the speed and change of price movements.
Usage
Use to identify overbought (>70) and oversold (<30) conditions. RSI divergences against price often signal impending trend reversals.
Background
Developed by J. Welles Wilder in New Concepts in Technical Trading Systems (1978), the RSI compares the magnitude of recent gains to recent losses to determine overbought and oversold conditions of an asset. It remains the most widely used momentum oscillator in modern technical analysis.
Parameters
timeperiod(default: 14): Lookback period
Formula
\[
RS = \frac{Average Gain}{Average Loss} \\ RSI = 100 - \frac{100}{1 + RS}
\]