Strength Index (RSI) is a popular oscillator. It was first introduced
by Welles Wilder in an article in Commodities Magazine in 1978.
Instructions on calculating and interpreting the RSI are provided in
New Concepts in Technical Trading Systems. Serious traders should
read this book for a complete discussion and interpretation of the
RSI measures the
strength of a stock movement.
The RSI is a fairly
simple formula, but is difficult to explain without pages of examples.
Refer to Welles Wilder's book for additional calculation information.
The basic formula is:
U = an average of
upward price change
D = an average of downward price change