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 looks stretched relative to the stock's own recent history. It's calculated by comparing the average size of up days to down days over a lookback period (14 days by default) and converting that ratio onto the 0-100 scale. Many traders treat 70 as a conventional "overbought" line and 30 as "oversold," but these are reference points, not fixed rules — a strongly trending stock can sit above 70 for a long stretch without reversing. RSI is different from "relative strength," which compares a stock to a benchmark index — despite the similar name, RSI measures momentum purely against the stock's own history. An overbought or oversold reading describes recent behavior, not a guaranteed prediction.