RSI (Relative Strength Index)
Relative Strength Index
In short
#TradingRSI is a momentum indicator scored from 0 to 100 that compares the size of recent gains to recent losses. Readings above 70 are conventionally called overbought and below 30 oversold.
Why it matters
RSI is the single most quoted indicator in market commentary, so you will hear it constantly. It does not predict direction. It measures how stretched a move already is. A stock can sit above 70 for weeks during a strong trend, which is why treating 70 as an automatic sell signal is the most common way people misuse it.
Example
A stock rallies from $40 to $58 in three weeks and its 14-day RSI hits 78. That does not mean the stock will fall. It means the recent up-days have overwhelmed the down-days, and further upside would need fresh buying rather than momentum alone.
Frequently asked
Does an RSI above 70 mean I should sell?
No. It means momentum is stretched, not that a reversal is due. In a strong uptrend RSI can hold above 70 for weeks. Most analysts use it as context alongside trend and price levels, never as a standalone trigger.
What RSI period do analysts usually mean?
14 periods is the default, so an unqualified reference to RSI almost always means 14-day RSI on a daily chart. Shorter settings like 7 react faster and produce far more overbought and oversold readings.