RSI (Relative Strength Index) is one of the technical analysis indicators. It predicts the future trend of buying and selling orders for a certain financial product in the market by analyzing the relationship between the average amplitude of closing price increases and the average amplitude of closing price declines over a period of time.
Calculation method: RSI = 100 – 100 / (1 + RS).
In the above formula, RS = average amplitude of closing price increase / average amplitude of closing price decline.
Using the RSI index, we can find overbought and oversold signals. When the RSI value of a financial product rises to 70, it is generally considered that an oversold signal appears. That is, the price of the product may be overvalued and it should be sold.
On the contrary, when the RSI drops to 30, it is generally considered that an overbought signal appears. That is, the price may be undervalued and it should be bought. In addition, if the change direction of the RSI index is different from that of the financial product price, it is also regarded as a buy or sell signal.
Reproduction Notes：InvestFancy » RSI(Relative Strength Index)