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Relative strength index - Definition and Overview |
| Related Words: Allied, Analogous, Ancestry, Approximate, Associative, Aunt, Blood, Brother, Child, Cognate, Collateral, Commensurable, Comparative |
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The Relative Strength Index (RSI) is a technical analysis indicator that measures relative gains, over relative losses, over time.
The RSI ranges from 0 to 100, but a security may be considered overbought if it reaches the 70 level, meaning that the speculator should consider selling. When it is a true bull market, an RSI of 80 might be a better level since stocks often trade at higher valuations. Likewise, if the RSI approaches 30, it is a strong buying indicator (20 in a strong bear market).
Large surges and drops in securities will affect RSI, but it could just be a false buy or sell. The RSI is best used as a complement with other technical analysis indicators.
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