Relative Strength Index

Relative strength index is a technical momentum indicator that compares the magnitude of recent gains to recent losses in an attempt to determine overbought and oversold conditions of an asset.

The range for the relative strength index is 0 to 100. An asset is usually deemed to be overbought once it approaches the 70 level. This may also indicate that it is getting overvalued and it may signal an upcoming fall in price. Similarly if the relative strength index approaches 30 it may be an indication that the asset is being oversold and therefore likely to become undervalued.

Large surges and drops in the price of an asset will affect the relative strength indicator by creating false buy or sell signals; therefore the relative strength indicator is best used as a valuable complement to other stock-picking tools.

• Number of periods to use in calculating the relative strength index
• Value to use as basis for calculation (open, low, high, close, adjusted close)