The Relative Strength Index (RSI) is a technical indicator that is used to measure the strength of a security’s price action. The RSI is calculated as a ratio of the average gain to the average loss over a specified number of periods. The RSI is a momentum indicator and it’s a value that oscillates between 0 and 100.
RSI is typically used to identify overbought or oversold conditions in a security. A value of 70 or above is considered to be overbought, indicating that the security may be due for a price correction, while a value of 30 or below is considered to be oversold, indicating that the security may be undervalued and due for a price increase.
However, it’s important to note that RSI is a lagging indicator, meaning it’s based on past performance and it’s also subject to interpretation, and it should not be used as a standalone indicator. Traders often use RSI in conjunction with other indicators and analysis to confirm trends, and to identify buying and selling opportunities.