The Relative Strength Index (RSI), developed by J. Welles Wilder in 1978, is a bounded momentum oscillator. It compares the magnitude of recent up-closes to the magnitude of recent down-closes over a look-back window (Wilder's default is 14) and rescales the result onto a 0–100 axis.
Conventional reads: above 70 = overbought, below 30 = oversold. In strongly trending markets those thresholds shift (Constance Brown's work argues 40–80 for uptrends and 20–60 for downtrends). RSI is also used to spot divergences — price makes a new high but RSI does not, suggesting weakening momentum.
Wilder used a smoothing scheme equivalent to an EMA with α = 1/N, not the standard EMA α = 2/(N+1). Different platforms use slightly different smoothing, so RSI values can disagree across charting tools.
Formula
RSI = 100 - 100 / (1 + RS), where RS = avg gain / avg loss over the look-back window
Esempio
Over 14 bars: average gain = 1.2, average loss = 0.6. RS = 2.0, RSI = 100 − 100 / 3 ≈ 66.7 — leaning bullish but not overbought.
Come Noon Barbari usa Relative strength index (RSI)
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