RSI (Relative Strength Index) Calculator

Formula

The formula to calculate the Relative Strength Index (RSI) is:

\[ RSI = 100 - \left( \frac{100}{1 + RS} \right) \]

Where:

\(RSI\) is the relative strength index
\(RS\) is the relative strength
\(RS = \frac{AG}{AL}\)
\(AG\) is the average gain (%)
\(AL\) is the average loss (%)

RSI Definition

RSI, short for relative strength index, is a metric used in finance to indicate "momentum" within the stock market or another asset. This "momentum" indicator is used to determine if an asset is currently overbought or oversold. RSI values of greater than 70 will be considered overbought and under 30 means the asset could be undervalued.

Example Calculation

Let's assume the following values:

Average Gain (AG) = 5%
Average Loss (AL) = 2%

Using the formula to calculate the Relative Strength Index:

\[ RS = \frac{5}{2} = 2.5 \] \[ RSI = 100 - \left( \frac{100}{1 + 2.5} \right) = 71.43 \]

The Relative Strength Index is 71.43, indicating the asset is overbought.