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RELATIVE STRENGTH INDEX

The Relative 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.

RSI measures the strength of a stock movement.

Calculation

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:

100 - [100/(1+(U/D))]

U = an average of upward price change
D = an average of downward price change

Source: Steven Achelis, Technical Analysis From A to Z
               
Welles Wilder, New Concepts in Technical Trading Systems

 

 

 

 

 

 

 

 

 

 


 

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