What is a good RSI value?

There is no good or bad value. RSI only shows whether recent gains or losses have been larger; 50 means they were equal on average.

Does RSI above 70 mean the price will fall?

No. It means recent moves were mostly up. In strong trends RSI can stay above 70 for a long time while price keeps rising.

Why is my RSI different from another chart?

Platforms may seed the first average differently, use another smoothing method or a different period. Small differences, especially early in the data, are normal.

J. Welles Wilder introduced RSI in his 1978 book New Concepts in Technical Trading Systems, along with ATR and other indicators.

RSI indicator explained

Updated 11 October 2026

The Relative Strength Index (RSI) is a momentum indicator created by J. Welles Wilder in 1978. It compares the size of recent up moves with recent down moves and turns the result into a number between 0 and 100.

An RSI near 100 means recent closes have mostly been higher than the ones before. An RSI near 0 means they have mostly been lower. That is all it measures: the balance of recent gains and losses.

The RSI formula

RSI = 100 − 100 ÷ (1 + RS)

where RS = average gain ÷ average loss over the chosen period, usually 14 candles.

For each candle, compare its close with the previous close. A rise is a gain; a fall is a loss (written as a positive number).
For the first value, average the gains and losses over 14 candles. A candle with a rise counts as zero loss, and vice versa.
After that, Wilder smooths each average: new average = (previous average × 13 + current value) ÷ 14.
Divide average gain by average loss to get RS, then plug it into the formula.

Worked example

Suppose over the last 14 days Stock XYZ's daily gains add up to ₹16.80 and its daily losses add up to ₹11.20.

Average gain = ₹16.80 ÷ 14 = ₹1.20
Average loss = ₹11.20 ÷ 14 = ₹0.80
RS = 1.20 ÷ 0.80 = 1.5
RSI = 100 − 100 ÷ (1 + 1.5) = 100 − 40 = 60

Next day the stock closes ₹2 higher, so the gain is ₹2 and the loss is ₹0.

New average gain = (1.20 × 13 + 2) ÷ 14 = 17.60 ÷ 14 = ₹1.2571
New average loss = (0.80 × 13 + 0) ÷ 14 = 10.40 ÷ 14 = ₹0.7429
RS = 17.60 ÷ 10.40 = 1.6923
RSI = 100 − 100 ÷ 2.6923 = 100 − 37.14 = 62.86

One up day moved RSI from 60 to about 62.9. Because of the smoothing, a single candle shifts RSI only a little, and old data never fully drops out.

How RSI is commonly read

70 and 30 levels

Wilder suggested 70 and 30 as reference lines. Above 70 is often called "overbought" and below 30 "oversold". These words are misleading. They only mean recent moves have been one-sided. In a strong trend, RSI can stay above 70 or below 30 for weeks while price keeps going.

The 50 line

Some people treat RSI above 50 as a sign that average gains are larger than average losses, and below 50 the opposite. That is simply a restatement of the formula: at 50, RS equals 1.

Divergence

A divergence is when price makes a new high but RSI makes a lower high (or price makes a new low and RSI a higher low). It shows that the latest push was smaller than the previous one. Divergences can last a long time, and many never lead to a reversal.

Settings

14 is the default. A shorter period, such as 7, makes RSI jumpier and crosses 70 and 30 more often. A longer period, such as 21, makes it smoother and slower. No setting is "best"; each just changes how much history the number reflects. Different platforms may also seed the first average differently, so values can differ slightly at the start of a chart.

Limits you should know

It lags. RSI is calculated only from past closes. It confirms what price already did.
It ignores volume and gaps within the day. Only closing prices count.
Thresholds are arbitrary. 70/30 and 80/20 are conventions, not laws.
It is bounded. RSI cannot show how far a move might go, only that it has been one-sided.
Works differently by timeframe. A 5-minute RSI and a daily RSI on the same stock can point in opposite directions.

People often compare RSI with MACD and Bollinger Bands. All three are built from past prices, so seeing them agree does not make a forecast more likely to be right.

The risk side

RSI is common in intraday and options trading, and that is where losses are concentrated. SEBI's studies (SEBI study, 2023 and 2025) found about 9 in 10 individual F&O traders lost money in FY22 and FY25. An indicator reading is not a reason to skip a stop-loss or to take a larger position than your position size maths allows.

Quick recap

RSI = 100 − 100 ÷ (1 + average gain ÷ average loss), usually over 14 periods.
It measures the balance of recent gains and losses on a 0–100 scale.
70 and 30 are reference lines, not buy or sell levels.
It describes the past and cannot predict the next move.

Questions people ask

What is a good RSI value?: There is no good or bad value. RSI only shows whether recent gains or losses have been larger; 50 means they were equal on average.
Does RSI above 70 mean the price will fall?: No. It means recent moves were mostly up. In strong trends RSI can stay above 70 for a long time while price keeps rising.
Why is my RSI different from another chart?: Platforms may seed the first average differently, use another smoothing method or a different period. Small differences, especially early in the data, are normal.
Who invented RSI?: J. Welles Wilder introduced RSI in his 1978 book New Concepts in Technical Trading Systems, along with ATR and other indicators.