Relative Strength Index (RSI)

The Relative Strength Index (RSI) is a popular momentum oscillator used in technical analysis to measure the strength of a security's price action. It is calculated by comparing the average gains of a security to the average losses over a set number of periods, usually 14.

The RSI is plotted on a scale from 0 to 100, with readings above 70 typically considered overbought, and readings below 30 considered oversold. When a security is overbought, it may indicate that it is due for a correction or pullback, while when a security is oversold, it may indicate that it is due for a bounce or rebound.

Traders and investors often use the RSI in conjunction with other forms of analysis, such as trend analysis and chart patterns, to make informed investment decisions. For example, they may use the RSI to confirm a trend reversal, or to identify potential entry or exit points.

It is important to note that the RSI is not a guarantee of future performance and that past performance is not always indicative of future results. Additionally, the RSI should be used in conjunction with other forms of analysis to make informed investment decisions.