RSI (Relative Strength Index)

RSI is a momentum indicator that turns a stock's recent gains and losses into a single number between 0 and 100, used to gauge whether a move has become stretched relative to the stock's own recent history. It's calculated by comparing the average size of up days to the average size of down days over a lookback period (14 days by default), then converting that ratio onto the 0-100 scale. Many traders use 70 as a conventional "overbought" line and 30 as a conventional "oversold" line, though these are reference points, not fixed rules — a strongly trending stock can sit above 70 for an extended stretch without reversing. RSI is distinct from "relative strength" as used to compare a stock against a benchmark index; despite the similar name, RSI measures a stock's momentum purely against its own recent history, not against anything external. An overbought or oversold reading describes recent price behavior, not a guaranteed prediction of what happens next.