RSI explained: what it measures and what it does not

The Relative Strength Index (RSI) is one of the most widely used momentum indicators. It compares the size of recent gains with the size of recent losses and expresses the result on a scale from 0 to 100. Most charting tools use a 14-period setting by default.

How it is calculated

For each period, the indicator separates upward price changes from downward price changes, averages them over the chosen number of periods and computes their ratio (the “relative strength”). That ratio is then converted to a 0–100 scale. A high value means recent gains have been large compared with recent losses; a low value means the opposite.

Overbought and oversold

Readings above 70 are commonly described as “overbought” and readings below 30 as “oversold”. These labels describe the speed of recent price movement — not a forecast. In a strong trend, RSI can stay in these zones for a long time while the price keeps moving in the same direction.

Common pitfalls

• Treating a zone as a signal on its own. An oversold reading in a falling market often reflects strength of the downtrend rather than an imminent reversal.
• Ignoring the timeframe. RSI on a 15-minute chart and on a weekly chart can say very different things about the same asset.
• Using one indicator in isolation. Momentum is only one dimension. Trend, volume and volatility add important context.

How our apps use it

In Novira and NBORSA, RSI is one of several inputs. It is shown on the detail screen with a simple description (for example “Normal” or “Oversold”), but no analysis is based on RSI alone.