What is the RSI indicator?
RSI is the abbreviation of Relative Strength Index.

The relative strength indicator RSI is a kind of technical curve made based on the ratio of the sum of the number of rising points and the number of falling points in a certain period of time. It can reflect the prosperity of the market in a certain period of time. It was first applied to futures trading by Welles Wilder. Later, it was found that in many technical analysis of charts, the theory and practice of strength indicators are extremely suitable for short-term investment in the stock market, so it was used in stocks. The rise and fall are being measured and analyzed. The design of the analysis indicator is to reflect the strength of the price trend with three lines. This kind of graph can provide investors with operating basis and is very suitable for short-term spread operations.

What is the calculation formula of the RSI indicator

Relative Strength Index (RSI) (Relative Strength Index)

The Relative Strength Index (RSI) is a technical indicator created by Wells Wider to calculate the comparison of market buying and selling power based on changes in stock prices during a specific period to determine the intrinsic strength of stock prices and to predict the future direction of price changes.

RSI indicator calculation formula
The derivation process of the formula is as follows:

Relative Strength Index (RSI) = (average of total increase in N days / average of total increase and total decline in N days) ╳ 100%

Generally, short-term RSI sets N=6, and long-term RSI sets N=12. The RSI value always changes within 0-100.

Relative strength indicator RSI application principles:

  1. The white short-term RSI value is below 20. When the yellow long-term RSI value crosses from bottom to top, it is a buy signal.
  2. The white short-term RSI value is above 80. When the yellow long-term RSI value crosses from top to bottom, it is a sell signal.
  3. The short-term RSI value breaks through 50 from top to bottom, indicating that the stock price has weakened.
  4. The short-term RSI value breaks through 50 from bottom to top, which means that the stock price has become stronger.

Technical indicators reflect the direction, amplitude, strength and other content of stock price fluctuations from a certain aspect. Because the indicators are set differently in time parameters, the analysis of securities investment also varies from person to person, with great experience. Only for reference value. If technical indicators are used well, they can often receive short-term miraculous effects.

The RSI indicator analyzes the intention and strength of market orders by comparing the average closing gains and the average return declines over a period of time, thereby analyzing future market trends.

The RSI indicator has three indexes. Among them, RSI1 means relative strength on the 6th, RSI2 means relative strength on the 12th, and RSI3 means relative strength on the 24th. Generally, an RSI of 50 is the middle line, more than 50 is a long market, and less than 50 is a short market.