11 January 2021
Glossary
Relative Strength Index, RSI
Relative Strength Index, RSI

It is a technical analysis tool that is used to measure the strength and trend of an asset/market price to identify overbought or oversold conditions. RSI is an oscillator that fluctuates between 0 and 100.

It is a technical analysis tool that is used to measure the strength and trend of an asset/market price to identify overbought or oversold conditions. RSI is an oscillator that fluctuates between 0 and 100.
RSI was developed by the mathematician and trader Wells Wilder. Wilder traded stocks and commodities and faced a common challenge in determining when to enter and exit a trade. In solving this problem, the mathematician has developed a formula that allows traders to better determine the entry/exit points of the long or short. If this indicator exceeds the mark of 70 points, the asset is considered overbought, and when it is less than 30 - oversold.
The main parameter of the oscillator is "Period". By default, the "Period" value is 14 (the author of the oscillator recommended using this value as half of the cycle in the market). Today, many traders also use the faster 5 and 9 indicators and the slower 25.
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