The Relative Strength Index (RSI) is a momentum oscillator that measures the magnitude of price movements as well as the speed or velocity of these movements. RSI measures the changes in price over a time period. The formula divides the average gain the price has had over that time by the average loss it has sustained, and then plots the data on a scale from 0 to 100, which is plotted on a separate chart.

StockHero RSI: a buy signal is generated when RSI is oversold, a sell signal is generated when RSI is overbought.

RSI values (purple) closer to 0 indicate overbought market conditions, while values closer to 100 indicate oversold conditions. Thresholds (yellow band) are usually assigned to RSI values; anything below 30 can indicate oversold, while values above 70 can indicate overbought. For time periods and trading intervals, lower thresholds may be used as a measure to reduce market noise or to produce a more confident signal.

RSI = 100 – 100/ (1 + RS)
RS = Average Gain of n days UP  / Average Loss of n days DOWN

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