Relative Strength Index

Relative Strength Index

o RSI A technical momentum indicator that compares the magnitude of recent gains to recent losses in an attempt to determine overbought oversold conditions and the asset
o asset is considered to be overbought once the RSI approaches the 70 level, which means it may be getting overvalued and is a good candidate for withdrawal.
o Also, if the RSI approaches 30, it is an indication that the funds may be getting oversold and therefore likely to become undervalued.
o A trader using RSI should be aware that large surges and drops in the price of assets will affect the RSI by creating false buy or sell signals
o RSI is best used as a valuable complement to other stock picking tools.