---
title: "Definition of RSI"
url: https://signalscreener.fr/definition/rsi/
markdown_url: https://signalscreener.fr/definition/rsi.md
description: "RSI measures momentum - is a stock overbought (too high, due for drop) or oversold (too low, due for bounce)?"
type: glossary-definition
site: Signal Screener
language: en
keywords:
  - "RSI"
  - "Relative Strength Index"
translations:
  es: https://signalscreener.fr/es/definition/rsi.md
  fr: https://signalscreener.fr/fr/definition/rsi.md
  pt: https://signalscreener.fr/pt/definition/rsi.md
  zh: https://signalscreener.fr/zh/definition/rsi.md
---

# Relative Strength Index

## What is RSI?

RSI measures momentum - is a stock overbought (too high, due for drop) or oversold (too low, due for bounce)? Ranges from 0-100. Above 70 = overbought. Below 30 = oversold.

## Think of it like this

Think of a rubber band. Stretch it too far (RSI > 70) and it wants to snap back. Let it go slack (RSI < 30) and it wants to tighten. RSI measures how stretched the price is.

## Formula

```
RSI = 100 - (100 / (1 + RS))
```

- **RS**: Average Gain / Average Loss over period
- **Period**: Typically 14 days

## Why it matters

- Identifies potential reversal points
- Shows momentum strength
- Helps time entries and exits
- Works in trending and ranging markets

## What's a good value?

| Range | Rating | What it means |
|---|---|---|
| < 30 | Oversold | Potentially undervalued, might bounce |
| 30-50 | Bearish | Downward momentum |
| 50-70 | Bullish | Upward momentum |
| > 70 | Overbought | Potentially overvalued, might correct |

## Real-world example

GameStop RSI hit 95 in January 2021 - extremely overbought, crashed soon after. March 2020 crash: many stocks RSI < 20 - extreme oversold, then rebounded strongly.

## Things to watch out for

- Can stay overbought/oversold in strong trends
- False signals in choppy markets
- Use with other indicators for confirmation
- Different timeframes give different readings

---

This is educational content, not financial advice.

Source: [Definition of RSI](https://signalscreener.fr/definition/rsi/) on Signal Screener. Free to quote and cite with attribution and a link to that URL, which is the canonical one.

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