# What the Relative Strength Index Measures This primer explains what the Relative Strength Index measures, how it is calculated, and the limits of this momentum oscillator indicator for chart readers. By OPT Team | Published 2026-10-12 | Updated 2026-10-14 [Read the canonical HTML article](https://www.onepurposetrading.com/blog/what-the-relative-strength-index-measures) ## What does the Relative Strength Index measure? ## Summary The Relative Strength Index is a momentum oscillator that measures the speed and change of price movements and moves between zero and 100. [StockCharts ChartSchool](https://chartschool.stockcharts.com/table-of-contents/technical-indicators-and-overlays/technical-indicators/relative-strength-index-rsi) The scale itself runs from zero to 100. A reading is a description of recent, smoothed price behavior, not a description of price level or trend direction on its own. ## How is the Relative Strength Index calculated? ## Summary RSI is built from three components, RS, Average Gain, and Average Loss, calculated by default over a 14 period look back window with losses expressed as positive values. [StockCharts ChartSchool](https://chartschool.stockcharts.com/table-of-contents/technical-indicators-and-overlays/technical-indicators/relative-strength-index-rsi) First, the calculation separates price changes inside the look back window into gains and losses, with losses expressed as positive values, and averages each side over the default 14 period window. Next, once that first set of 14 period averages exists, each later period updates the averages using a smoothing step. After the first 14 period averages, each later Average Gain or Average Loss is calculated by multiplying the prior average by one fewer than the look back count, adding the latest value, and dividing by the look back count, a smoothing technique similar to an exponential moving average. [StockCharts ChartSchool](https://chartschool.stockcharts.com/table-of-contents/technical-indicators-and-overlays/technical-indicators/relative-strength-index-rsi) Finally, the look back count itself can be changed. Lowering the RSI look back period below the 14 period default increases sensitivity, and raising it decreases sensitivity, so a 10 day RSI reaches overbought or oversold levels more often than a 20 day RSI. [StockCharts ChartSchool](https://chartschool.stockcharts.com/table-of-contents/technical-indicators-and-overlays/technical-indicators/relative-strength-index-rsi) ## Where did the Relative Strength Index come from? ## Summary The Relative Strength Index was developed by J. Welles Wilder, who features it in his 1978 book, New Concepts in Technical Trading Systems. [StockCharts ChartSchool](https://chartschool.stockcharts.com/table-of-contents/technical-indicators-and-overlays/technical-indicators/relative-strength-index-rsi) ## What does published research say? ## Summary The sources cited here include no published test of the Relative Strength Index. Our sources include reviews of technical trading rules in general. A 2007 review by Cheol-Ho Park and Scott Irwin looked at 95 modern studies of technical trading rules in general: 56 reported positive results, 20 negative results, and 19 mixed results. Despite that positive evidence, the review found that most of the studies had problems in their testing, such as data snooping and difficulty estimating risk and transaction costs, and said future research must fix them before the evidence can be called conclusive. [RePEc IDEAS](https://ideas.repec.org/a/bla/jecsur/v21y2007i4p786-826.html) A 2011 St. Louis Fed working paper by Christopher Neely and Paul Weller reviewed research on technical trading rules in general in currency markets. It reported that simple rules on dollar exchange rates gave positive returns, after accounting for risk, for 15 years in the 1970s and 1980s before those returns disappeared, and that more complex, less studied rules have since produced more modest returns. [Fed in Print (Federal Reserve)](https://fedinprint.org/item/fedlwp/9562/original) ## How is the Relative Strength Index commonly used? ## Summary Traditional RSI convention treats a reading above 70 as overbought and a reading below 30 as oversold. [StockCharts ChartSchool](https://chartschool.stockcharts.com/table-of-contents/technical-indicators-and-overlays/technical-indicators/relative-strength-index-rsi) This convention describes where a reading sits on the zero to 100 scale. It does not describe subsequent price action, and it does not tell a chart reader anything about price level or trend by itself. For example, if the 14 period Relative Strength Index on a hypothetical daily chart reads 78, that places it above the traditional 70 level described above. If the same hypothetical chart reads 22, that places it below the traditional 30 level. This example is illustrative only and does not indicate typical results. ## What are the limits and common misreads? ## Summary Relative Strength Index is calculated from past market data; it is not a forecast. The calculation only looks at the relationship between smoothed average gains and smoothed average losses. It does not account for price level, chart pattern, trading volume, or news events. A reading above 70 or below 30 describes where the number sits on the scale right now. It does not describe how long that reading continues or what later readings will show. Every reading in this article comes from past market data; none of it is a forecast. ## How is the Relative Strength Index read alongside other context? ## Summary RSI is one piece of information among several a chart reader can review together, not a stand-alone answer. Some chart readers look at an RSI reading next to price structure, volume, or other indicators they already track, simply to have more than one description of recent activity in view at the same time. A related article walks through [testing one indicator without changing the rules](/blog/how-to-test-one-indicator-without-changing-the-rules). Adding more context does not remove uncertainty. No indicator or combination of indicators makes an outcome certain. Trading involves the risk of loss. ## Key takeaways - The Relative Strength Index is a momentum oscillator that measures the speed and change of price movements and moves between zero and 100. [StockCharts ChartSchool](https://chartschool.stockcharts.com/table-of-contents/technical-indicators-and-overlays/technical-indicators/relative-strength-index-rsi) - Traditional RSI convention treats a reading above 70 as overbought and a reading below 30 as oversold. [StockCharts ChartSchool](https://chartschool.stockcharts.com/table-of-contents/technical-indicators-and-overlays/technical-indicators/relative-strength-index-rsi) - Recording a reading in a trading journal alongside the rest of the chart context is a matter of personal process, not a stand-alone conclusion. ## Disclosure This article is educational and is not personalized financial advice. Examples are illustrative only and do not indicate typical results. No outcome is assured. Trading involves the risk of loss. ## Next step Consider recording any Relative Strength Index reading in your trading journal alongside the rest of your chart notes, so the number sits next to the full context around it. [Review the trading journal resource](/trading-journal) ## Frequently asked questions ### What range does the Relative Strength Index move within? The Relative Strength Index is a momentum oscillator that measures the speed and change of price movements and moves between zero and 100. [StockCharts ChartSchool](https://chartschool.stockcharts.com/table-of-contents/technical-indicators-and-overlays/technical-indicators/relative-strength-index-rsi) ### What levels are commonly described as overbought or oversold? Traditional RSI convention treats a reading above 70 as overbought and a reading below 30 as oversold. [StockCharts ChartSchool](https://chartschool.stockcharts.com/table-of-contents/technical-indicators-and-overlays/technical-indicators/relative-strength-index-rsi) ### Does changing the look back period change how often the reading reaches extreme levels? Lowering the RSI look back period below the 14 period default increases sensitivity, and raising it decreases sensitivity, so a 10 day RSI reaches overbought or oversold levels more often than a 20 day RSI. [StockCharts ChartSchool](https://chartschool.stockcharts.com/table-of-contents/technical-indicators-and-overlays/technical-indicators/relative-strength-index-rsi) ### Should a single reading decide a trading action on its own? No indicator or combination of indicators makes an outcome certain. Trading involves the risk of loss. ## Risk disclosure This article is educational content from One Purpose Trading. It is not financial, investment, tax, or legal advice, and nothing here is a recommendation to buy or sell any security or instrument. Trading involves substantial risk of loss and is not suitable for everyone. You can lose more than your initial investment. Any examples, figures, or scenarios are illustrative only. Results are not typical, and past performance does not guarantee future results. You are responsible for your own decisions. Trade only with capital you can afford to lose, and consider consulting a licensed professional about your individual situation.