Relative strength index - Wikipedia, the free encyclopedia

This link has been bookmarked by 5 people . It was first bookmarked on 12 Aug 2007, by Wesley Shu.

18 Nov 14

Hisashi Nishioka
- based on the closing prices of a recent trading period.
06 Aug 12

sarim siddiqui
- For each trading period an upward change U or downward change D is calculated. Up periods are characterized by the close being higher than the previous close:
  
  $U = \text{close}_\text{now} - \text{close}_\text{previous}$
  
  $D = 0$
  
  Conversely, a down period is characterized by the close being lower than the previous period's (note that D is nonetheless a positive number),
  
  $U = 0$
  
  $D = \text{close}_\text{previous} - \text{close}_\text{now}$
  
  If the last close is the same as the previous, both U and D are zero. The average U and D are calculated using an n-period exponential moving average (EMA) in the AIQ version (but with an equal-weighted moving average in Wilder's original version).^[3] The ratio of these averages is the relative strength or relative strength factor:
  
  $RS = \frac{\text{EMA}(U,n)}{\text{EMA}(D,n)}$
- $RS = \frac{\text{EMA}(U,n)}{\text{EMA}(D,n)}$
  
  If the average of D values is zero, then the RSI value is defined as 100.
  
  The relative strength factor is then converted to a relative strength index between 0 and 100:^[3]
  
  $RSI = 100 - { 100 \over {1 + RS} }$
- The slope of the RSI is directly proportional to the velocity of a change in the trend. The distance traveled by the RSI is proportional to the magnitude of the move.
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12 Apr 11

Anuj Varma
stocks
21 Feb 09

Wei Chang
12 Aug 07

Wesley Shu
investment rsi technical_analysis
- For each day an upward change U or downward change D amount is calculated.^[3] On an up day, ie. today's close higher than yesterday's,
  
  $U = c l o s e t o d a y - c l o s e y e s t e r d a y$
  
  $D = 0$
  
  Or conversely on a down day (notice D is a positive number),
  
  $U = 0$
  
  $D = c l o s e y e s t e r d a y - c l o s e t o d a y$
  
  If today's close is the same as yesterday's, both U and D are zero. An average U is calculated with an exponential moving average using a given N-days smoothing factor, and likewise for D. The ratio of those averages is the Relative Strength,
  
  $RS = { EMA[N] \; of \; U \over EMA[N] \; of \; D }$
  
  This is converted to a Relative Strength Index between 0 and 100,
  
  $RSI = 100 - 100 \times { 1 \over 1 + RS }$
- $RS = { EMA[N] \; of \; U \over EMA[N] \; of \; D }$
- $RSI = 100 \times { EMA[N]\;of\;U \over (EMA[N]\;of\;U) + (EMA[N]\;of\;D) }$
- Wilder considered a security overbought if it reached the 70 level, meaning that the speculator should consider selling. Or conversely oversold at the 30 level.
- 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.
- The principle is that when there's a high proportion of daily movement in one direction it suggests an extreme, and prices are likely to reverse.
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