What is the RSI of a stock?
Updated on August 24, 2026 · by Alex
The RSI (Relative Strength Index) is an indicator that compares the size of recent gains with the size of recent losses, on a scale of 0 to 100. It is used to measure whether a price move has been strong or weak.
The standard calculation uses 14 sessions and produces a number between 0 and 100. By convention:
It is a close cousin of Williams %R: both are momentum oscillators and they usually give similar readings, though on different scales.
Because it describes something the price alone does not tell you: how much conviction was behind the move. A stock that rose 10% with an RSI climbing to 75 behaved very differently from one that rose the same amount while its RSI barely moved off 50.
The use most often highlighted by the people who rely on it is not the level but the divergence: when the price makes a higher high than the previous one but the RSI makes a lower one, the move is losing strength even if the price does not show it yet.
Reading 70 as "sell" and 30 as "buy." This is the central misunderstanding behind every oscillator, and it is expensive.
In a strong uptrend, a stock can stay above 70 for weeks or months while it keeps climbing. Selling on the first overbought reading usually means stepping out at the beginning of the move. In a sustained decline the mirror image happens: the RSI can sit below 30 for a long time while the price keeps falling, and buying there is trying to catch a falling knife.
The second mistake is using it in isolation. The RSI knows nothing about the business, its earnings or its industry: it describes recent price behavior, nothing more. As your only decision-making tool it is an expensive way to look at a chart.
