{"id":61789,"date":"2026-09-04T09:07:43","date_gmt":"2026-09-04T01:07:43","guid":{"rendered":"https:\/\/www.vtmarkets.com\/en-asia\/uncategorized\/relative-strength-index-rsi-definition\/"},"modified":"2026-09-04T09:07:43","modified_gmt":"2026-09-04T01:07:43","slug":"relative-strength-index-rsi-definition","status":"publish","type":"post","link":"https:\/\/www.vtmarkets.com\/en-asia\/trading-glossary\/relative-strength-index-rsi-definition\/","title":{"rendered":"Relative Strength Index (RSI) Definition"},"content":{"rendered":"

What Is the Relative Strength Index (RSI)?<\/strong><\/h2>\n

The Relative Strength Index, or RSI, is a technical indicator used to analyse the momentum of the price of a security. It’s displayed on a scale of 0 to 100 and is one of the most widely used momentum tools across all types of markets, from forex and shares to commodities and indices.<\/p>\n

How RSI Is Calculated<\/strong><\/h2>\n

RSI compares the average size of recent gains to the average size of recent losses over a set period, commonly 14 sessions, then converts that comparison into a single reading. The exact formula is less important for most traders than understanding what the resulting number represents, and most charting platforms calculate it automatically.<\/p>\n

RSI is calculated using:<\/strong><\/p>\n

where\u00a0RS<\/strong>\u00a0= (Average Up Moves over N periods) \/ (Average Down Moves over N periods), typically using a 14-period lookback. The RSI ranges from 0\u2013100, with >70 considered overbought and \\<30 oversold.<\/p>\n

Reading Overbought and Oversold Levels<\/strong><\/h2>\n

An RSI reading above 70 is traditionally seen as a sign a security may be overbought, while a reading below 30 suggests it may be oversold. These thresholds are a guide rather than a precise trigger, and some traders adjust them depending on the asset or timeframe, using tighter or wider bands depending on typical volatility.<\/p>\n

How Traders Use RSI Alongside Other Tools<\/strong><\/h2>\n

RSI is rarely used on its own. Many traders pair it with trend lines, support and resistance levels, or other indicators to confirm a signal before acting on it, since momentum readings can stay at extreme levels for longer than expected during strong trends, a pattern often referred to as divergence when price and RSI move in opposite directions.<\/p>\n

RSI Can Give False Signals: What to Keep in Mind<\/strong><\/h2>\n

As a precaution, an overbought or oversold reading doesn’t guarantee an imminent reversal, particularly in a strongly trending market where RSI can remain elevated for an extended period. Treating RSI signals as certainties rather than probabilities is a common pitfall, especially for those new to technical analysis.<\/p>\n

Using RSI as One Piece of the Puzzle<\/strong><\/h2>\n

RSI offers a useful read on momentum, but it works best as part of a wider analysis rather than a standalone decision-making tool. Combining it with other indicators and sound risk management tends to produce a more balanced approach.<\/p>\n

\u26a0 Risk Warning:<\/strong> CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. Ensure you fully understand how CFDs work and whether you can afford to take the high risk of losing your money.<\/p>\n","protected":false},"excerpt":{"rendered":"

What Is the Relative Strength Index (RSI)? The Relative Strength Index, or RSI, is a technical indicator used to analyse the momentum of the price of a security. It’s displayed on a scale of 0 to 100 and is one of the most widely used momentum tools across all types of markets, from forex and Continue Reading<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[101,100],"tags":[107],"class_list":["post-61789","post","type-post","status-publish","format-standard","hentry","category-popular-term","category-trading-glossary","tag-technical-analysis"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\n\t\t