Relative Strength Index

The Relative Strength Index, or Relative Strength Index ( short RSI) is an oscillating indicator and was developed in 1978 by Welles Wilder. He is one of the indicators in technical analysis most commonly used. It can have values ​​ranging from 0 to 100%.

Calculation

The indicator uses the up and down movements of an underlying asset over time in relation. For this purpose, a moving average of the up and down movement is calculated and taken into consideration. Welles Wilder chose here 14 days (corresponding to α = 1/ 14 or N = 27 in the EMA terminology). In addition, today 7, 9 or 25 days are usual. The shorter the period under consideration, the more volatile the indicator, but will also be less signals with longer periods triggered.

There is first the sum of all positive and negative price changes is calculated:

Then the average of the sums is taken:

The RSI is then given by

Alternatively, the arithmetic mean can also be used exponential smoothing.

Signal

Shares with a RSI of more than 70 % are considered " overbought " considered values ​​with a RSI below 30% as " oversold ". Some analysts adjust these values ​​depending on the exchange environment:

• In a bull market ( uptrend ): reference line at 40 ( oversold ) and 80 ( overbought )
• In a bear market: reference line at 20 ( oversold ) and 60 ( overbought )

General evaluates to achieving or exceeding the thresholds towards the central area as one of several possible buy and sell signals.