What is RSI? The Relative Strength Index in plain English
By SendPay Business · · 2 min read
The Relative Strength Index (RSI) is a chart indicator, introduced by J. Welles Wilder in 1978, that measures how strongly a price has been rising compared with falling. It runs on a scale from 0 to 100.
How it is worked out
- Over the last 14 periods (the usual setting), find the average gain on up days and the average loss on down days.
- Divide the average gain by the average loss to get the relative strength (RS).
- RSI = 100 − 100 ÷ (1 + RS). Wilder smoothed the averages so each new period updates them gradually.
Reading the number
A reading above 70 is commonly called overbought and below 30 oversold, meaning the price has moved a long way in one direction recently. Around 50 means gains and losses have been roughly balanced.
The limits
In a strong trend RSI can stay above 70 or below 30 for a long time, so overbought doesn't mean a fall is due. It is built only from past prices and works best alongside other information.
Where SendPay fits
SendPay doesn't offer trading. SendPay platforms let your customers hold GBP, EUR and USD and exchange between them at a fee you set, alongside transfers and branded Visa cards, powered by licensed partners.
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This guide is general information, not legal or financial advice. SendPay Business is a technology company, not a bank, and does not take deposits; regulated services on the platforms are provided by licensed partners. PayPal, Patreon and Substack are named as reference points only and are not affiliated with SendPay Business.