The relative strength index RSI is a rsi indicator used in the analysis of financial markets. It is intended to chart the current and historical strength or weakness of a stock or market based on the closing prices of forex recent trading period. The indicator should not be confused with relative strength. The RSI is classified as a momentum oscillatormeasuring the velocity and magnitude of directional price movements. Momentum is the rate of the rise or fall in price. The RSI computes momentum as the ratio of higher closes to lower closes: Rsi RSI is most typically used on a day timeframe, measured on a scale from 0 towith high and low levels marked at 70 and 30, respectively. Shorter or longer timeframes are used for alternately shorter or longer outlooks. More extreme high and low levels—80 and 20, or 90 forex 10—occur less frequently but indicate stronger momentum. The relative strength index was developed by J. Welles Wilder and published in a book, Rsi Concepts in Technical Trading Systemsand in Commodities magazine now Futures magazine forex the June issue. The RSI provides signals that tell investors to buy when the currency is oversold and to sell when it is overbought. For forex trading period an upward change U or downward change D is calculated. Up periods are characterized by the close being higher than the previous close:. Conversely, a down period is characterized by the close being lower than the previous period's close note that D is nonetheless a positive number. Forex the last close is the same as the previous, both U and D are zero. Some commercial packages, like AIQ, use a standard exponential moving average EMA as the average instead of Wilder's SMMA. Wilder originally formulated the calculation of the moving average as: This is fully equivalent to the aforementioned exponential smoothing. If the average of D values is zero, then according to the equation, the RS value will approach infinity, so that the resulting RSI, as computed below, will approach The relative strength factor is then converted to a relative strength index between 0 and The smoothed moving averages should be appropriately initialized with a simple moving average using the first n values in the price series. The RSI is presented on a graph above or below the price chart. The indicator has an upper line, typically at 70, a lower line at 30, and a dashed mid-line at Wilder recommended a smoothing period of 14 see exponential smoothingi. Wilder posited [1] that when price moves up very rapidly, at some point it is considered overbought. Likewise, when price falls very rapidly, at some point it is considered oversold. In either case, Wilder deemed a reaction or reversal imminent. The level of the RSI is a measure of the stock's recent trading strength. Rsi slope of the RSI is directly proportional to the velocity of a change in the trend. The distance traveled by the RSI forex proportional to the magnitude of the move. Wilder believed that tops and bottoms are indicated when RSI goes above 70 or drops below Traditionally, RSI readings greater than the 70 level are considered to be in overbought territory, and RSI readings lower than the 30 level are considered to be in oversold territory. In between the 30 and 70 level is considered neutral, with the 50 level a sign of no trend. Wilder further believed that divergence between RSI and price action is a very strong indication that a market turning point is imminent. Bearish divergence occurs when price makes a new high but the RSI makes a lower high, thus failing forex confirm. Bullish divergence occurs when price makes a new low but RSI makes a higher low. Wilder thought that rsi swings" forex 70 and below 30 on the RSI are strong indications of market reversals. If it falls below 72, Wilder would consider this a "failure swing" above Finally, Wilder wrote that chart formations and areas of support and resistance could sometimes be more easily seen on the RSI chart as opposed to the price chart. The center line for the relative strength index is 50, which is often seen as both the support and resistance line for the indicator. If the relative strength index is below 50, it generally rsi that the stock's losses are greater than the gains. Forex the relative strength index is above 50, it generally means that the gains are greater than the losses. In addition to Wilder 's original theories of RSI interpretation, Andrew Cardwell has developed several new interpretations of RSI to help determine and confirm trend. First, Cardwell noticed that uptrends generally traded between RSI 40 and 80, while downtrends usually traded between RSI 60 and Cardwell observed when securities change from uptrend to downtrend and vice versa, the RSI will undergo a "range shift. Next, Cardwell noted that bearish divergence: Therefore, bearish divergence is a sign confirming an uptrend. Similarly, bullish divergence is a sign confirming a downtrend. Finally, Cardwell discovered the existence of positive and negative reversals in the RSI. Reversals are the forex of divergence. For example, a positive reversal occurs when an uptrend price correction results in a higher low compared to the last price correction, while RSI results in a lower low compared to the prior correction. A negative reversal happens when a downtrend rally results in a lower high compared to the last downtrend rally, but RSI makes a higher high compared to the prior rally. In other words, despite stronger momentum as seen by the higher high or lower low in the RSI, price could not make a higher high or lower low. This is evidence the main trend is about to resume. Cardwell rsi that positive reversals only happen in uptrends while negative reversals only occur in downtrends, and therefore their existence confirms the trend. A variation called Cutler's RSI is based on a simple moving average of U and D[6] instead of the exponential average above. Cutler had found that since Wilder used a smoothed moving average to calculate RSI, the value of Wilder's RSI depended upon where in the data file rsi calculations started. Cutler termed this Data Length Dependency. Cutler's RSI is not data length dependent, and returns consistent results regardless of rsi length of, or the starting point within a data file. Cutler's RSI generally comes out slightly rsi from the normal Wilder RSI, but the two are similar, since SMA and SMMA are also similar. From Wikipedia, the free encyclopedia. How to Spot Market Trends 2nd ed. John Wiley and Sons. Retrieved 29 June Breakout Dead cat bounce Dow theory Elliott Wave Principle Market trend. Candlestick chart Kagi rsi Line chart OHLC chart Point and figure chart. Broadening top Cup and handle Double top and rsi bottom Flag and pennant Gap Head and shoulders Island reversal Price channels Triangle Triple top and triple bottom Wedge pattern. Doji Hammer Hanging man Inverted hammer Marubozu Shooting star Spinning top. Hikkake pattern Morning star Three Black Crows Three white soldiers. Bottom Fibonacci retracement Pivot point PP Top. Average directional index A. Advance—decline line ADL Arms index TRIN McClellan oscillator. Coppock curve Ulcer index. Retrieved from " https: Pages using ISBN magic links Articles needing additional references from June All articles needing additional references. Navigation menu Personal tools Not logged in Talk Contributions Create account Log forex. Views Read Edit View history. Navigation Main page Contents Featured content Current events Random article Donate to Wikipedia Wikipedia store. Interaction Help About Wikipedia Community forex Recent changes Contact page. Tools Rsi links here Related changes Upload file Special pages Permanent link Page information Wikidata item Cite this page. This page was last edited on 7 Decemberat Text is available under the Creative Commons Attribution-ShareAlike License ; additional terms may apply. By using this site, you agree to the Terms of Use and Privacy Policy. Privacy policy About Wikipedia Disclaimers Contact Wikipedia Developers Cookie statement Mobile view. This section does not forex any sources. Please help improve this section by adding citations to reliable sources. Unsourced material may be challenged and removed. June Learn how and when to remove this template message. Chart Broadening top Cup and handle Double top and double bottom Flag and pennant Gap Head and shoulders Island reversal Price channels Triangle Triple top and triple bottom Wedge pattern. Simple Doji Hammer Hanging man Inverted hammer Marubozu Shooting star Spinning top.
They also might have problems with impulse control, shoplifting, and may be very sexually adventurous.
While most of the explorations are geared for single student use there are included ideas in brackets to extend it to several students.