RSI stands for the relative strength index. It is a key tool used in technical analysis, assessing the momentum of assets to gauge whether they are in overbought or oversold territory.
To calculate RSI, follow this equation:
RSI = 100 – 100/(1+(average up closes/average down closes))
The RSI calculation gives a figure between 0-100. Most analysts believe that an asset at around the 70 level is in overbought territory and may be in for a correction, while an asset at or near 30 is oversold and may be in for a rally.