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Investing and Money Glossary, terms and definitions.

Relative Strength Index (RSI)

An indicator for technical stock analysis developed by Welles Wilder to help investors gauge the current strength of a stock's price relative to its past performance. The usefulness of this indicator is based on the premise that the RSI will usually top out or bottom out before the actual market top or bottom, giving a signal that a reversal or at least a significant reaction in stock price is imminent.

RSI readings above 70 indicate the shares are overbought and are likely to start falling. Readings below 30 indicate the shares are oversold and a rally can be expected. The time period specified determines the volatility of the RSI. For example, a 9-day time period will be more volatile than a 21-day time span.

When using Investor charts to study RSI, you can select whatever time period works best for your investing strategy. Check this feature out in Investor's Stock area under the Charts tab on the left navigation bar.

 

 

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