◆ Indicator · RSI

RSI (Relative Strength Index) : definition, formula and how to read it

The RSI is the world's most widely used momentum oscillator. It measures the speed and size of recent gains versus losses on a 0 to 100 scale. This guide explains how it is calculated, how to read overbought and oversold zones, and how to apply it on GraphTrade charts.

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14

default period

70 / 30

classic levels

1978

created by Wilder

01 · Indicator · RSI

What is the RSI?

The Relative Strength Index was introduced by J. Welles Wilder in 1978. It compares the average of up closes with the average of down closes over a period, 14 candles by default. The result is scaled between 0 and 100: the higher it is, the more buyers have dominated recently.

The RSI does not predict a price: it describes the pace of the move. That is why it should always be read together with the trend on the main chart and on a higher timeframe.

02 · Indicator · RSI

The RSI formula

RSI = 100 − 100 / (1 + RS), where RS is the ratio of average gains to average losses over N periods. Wilder uses a specific smoothing: each new average takes the previous one weighted by (N − 1) and adds the latest change.

A short period (7 to 9) makes the RSI jumpy and produces more signals; a long period (21 to 25) smooths it and reduces false signals. On GraphTrade, the RSI period and its average are set in the Indicators window of the Charts page.

03 · Indicator · RSI

Overbought, oversold and the 50 line

Above 70 the market is called overbought; below 30, oversold. These zones flag an extended move, not a certain reversal: in a strong trend the RSI can stay above 70 for weeks.

The 50 line works as a bias filter. An RSI bouncing above 50 in an uptrend confirms buyer strength; an RSI failing below 50 in a downtrend confirms selling pressure.

04 · Indicator · RSI

Divergences, the most useful signal

A bearish divergence appears when price makes a higher high while the RSI makes a lower high: the move is losing steam. A bullish divergence is the opposite on lows.

A divergence is not an entry signal on its own. It becomes more meaningful near a key zone, such as an Order Block, a Bollinger band or a level you drew yourself.

05 · Indicator · RSI

RSI with other indicators

The RSI is often paired with the MACD: the first measures excess, the second trend dynamics. Combined with a moving average or the Ichimoku cloud, it helps avoid buying an oversold reading in a clear downtrend.

For a market-wide view, the Heatmap shows whether the move is broad, and the AI Compass explains what is driving it.

◆ Step by step

Get started in 4 steps

  1. 01

    Open a chart

    Search for an asset (Bitcoin, Apple, S&P 500) on the Charts page.

  2. 02

    Add the RSI

    Open Indicators, Momentum group, and click RSI.

  3. 03

    Set the period

    Keep 14 by default or adjust the period and average to your timeframe.

  4. 04

    Read the context

    Compare the RSI with the 70/50/30 guides and look for divergences with price.

Show the RSI on a chart

◆ FAQ

Your questions, clear answers.

01

What is the best RSI setting?

14 periods remains the standard. Short-term traders sometimes use 7 to 9, investors 21 or more to filter noise.

02

Does an RSI above 70 mean I should sell?

No. It signals an extended move. In a strong uptrend the RSI can stay overbought for a long time; wait for a divergence or a structure break.

03

Does the RSI work on cryptocurrencies?

Yes, on any price series. Since crypto is more volatile, some traders widen the levels to 80/20.

04

What is the difference between RSI and StochRSI?

StochRSI applies a stochastic to the RSI: it is much more sensitive and mainly used to fine-tune timing.

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