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What is the RSI (relative strength index)?
RSI, the relative strength index, is a chart indicator that compares the size of recent price gains with recent losses and scores the result from 0 to 100. Readings of 70 or more are conventionally called overbought, and 30 or less oversold.
What it means for you
RSI is computed from past prices: it describes recent momentum and does not tell you what happens next. In a strong trend it can stay above 70 or below 30 for a long time while the price keeps going, so an overbought reading is not a sign that a fall is coming.
How it works
J. Welles Wilder introduced RSI in 1978. It equals 100 minus 100 divided by (1 plus average gain over average loss) for the period. Periods with losses count as zero in the average gain, and periods with gains count as zero in the average loss. The standard period is 14. If gains dominate, the ratio is large and RSI nears 100; if losses dominate, it nears 0. The CFTC describes overbought as a technical opinion that prices have risen too steeply and too fast.
An example
Say over 14 days a coin's average daily gain was $2 and its average daily loss $1. The ratio is 2, so RSI is 100 minus 100 divided by 3, about 67. If the average loss shrinks to $0.50, the ratio is 4 and RSI is 80.
Sources: Menoita and Silva: Evolving Financial Trading Strategies with Vectorial Genetic Programming (arXiv), Deep et al.: Assessing the Impact of Technical Indicators on Machine Learning Models for Stock Price Prediction (arXiv, v1), CFTC Glossary · checked 4 October 2026
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