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# What is a good RSI number?

## Ultimate Guide to the Relative Strength Index (RSI)

The Full Form of  RSI is Relative Strength Index  which is the important indicator of Swing Trading. RSI indicator was introduce by  J. Welles Wilder in his book “New Concepts in Technical Trading Systems”.  to the trading community.  RSI is the one of the best technical indicator & momentum oscillator that measures the speed and change of price movements, RSI oscillates between zero and 100.

RSI  shows overall market and individual stock position in National stock Exchange (NSE) & Bombay Stock Exchange (BSE). The RSI is one such indicator that analysts use to determine whether the asset is in an oversold or overbought territory. If it shows a value less than 30, it indicates that the stock, or the index, is in the oversold territory, while a value higher than 70 suggests an overbought status. One can also get the idea of whether the present trend in the stock is intact or  is likely to reverse in coming days.

Also Read: What is supertrend in technical analysis?

In the so many articles, interviews, and books over the years have given due credit to the  RSI has the  most popular momentum oscillator. Most of all technical analyst use RSI indicator to consider the trend of the market i.e. bull market or the bear market  and its ranges. RSI indicator also shows when the market will  reverse from bull market to bearish and vice versa. So trader can square off his position immediately if the position is against the RSI signal.

### RSI Indicator – Multiply Your Profits

Calculation

Relative Strength Index (RSI) = 100 – 100 / (1 + RS)

RS = Average Gain / Average Loss

To simplify the calculation explanation, RSI has been broken down into its basic components like RS, Average Gain and Average Loss.  This RSI calculation is based on 14 periods.  Losses are expressed as positive values, not negative values.

The very first calculations for average gain and average loss are simple 14-period averages.

• First Average Gain = Sum of Gains over the past 14 periods / 14.
• First Average Loss = Sum of Losses over the past 14 periods / 14

The second, and subsequent, calculations are based on the prior averages and the current gain loss:

• Average Gain = [(previous Average Gain) x 13 + current Gain] / 14.
• Average Loss = [(previous Average Loss) x 13 + current Loss] / 14.

In short RSI is most popular Indicator  to shows oversold or over bought position and Running Market Trend .

RSI values range from 0 to 100. The default time frame for comparing the RSI is 14 trading days. A  RSI value of 70+  indicate that the stock is becoming overbought or overvalued, and therefore a trend reversal or corrective downtrend  can happen in the stock.