Relative Strength Index Calculator (RSI)

The RSI is a momentum oscillator that measures the speed and change of price movements on a scale from 0 to 100. The standard calculation first determines the average gain and average loss over a given lookback period (typically 14 periods). The formula is expressed as RSI = 100 - (100 / (1 + RS)), where RS (Relative Strength) equals the average of 'n' periods' up closes divided by the absolute value of the average of 'n' periods' down closes. To compute this accurately, the tool requires a minimum number of price points defined as floor(period + 2).

Imagine you are tracking a stock over a 14-period timeframe using a set of 15 closing prices. First, you calculate the price changes between each consecutive day. Suppose out of those 14 changes, 9 were positive gains totaling $28.00 (average gain of $3.11), and 5 were negative losses totaling $10.00 (average loss of $2.00). The Relative Strength (RS) is calculated as 3.11 / 2.00, which equals 1.555. Next, we apply the main RSI formula: RSI = 100 - (100 / (1 + 1.555)). This results in 100 - (100 / 2.555), which equals an RSI of approximately 60.86, indicating steady bullish momentum without reaching overbought extremes.

Always combine RSI readings with other indicators, such as moving averages or volume profiles, to confirm market trends. Avoid treating an RSI above 70 or below 30 as an immediate, automatic signal to reverse your position; in strong bull or bear markets, prices can remain in extreme zones for extended periods. Lastly, pay close attention to divergence—when the price moves in the opposite direction of the RSI line—as this often signals a powerful upcoming trend reversal.