What Is RSI? (Relative Strength Index) Explained

RSI (Relative Strength Index) is a momentum indicator that measures how fast and how much a stock has moved. It runs from 0 to 100 and helps investors identify whether a stock is oversold (falling too fast) or overbought (rising too fast).

How to Read RSI

RSI below 30 — Oversold: The stock has fallen hard and fast. May be due for a bounce, or could keep falling if there's a fundamental reason for the decline.
RSI 30–70 — Neutral: Normal momentum range. No extreme signal either way.
RSI above 70 — Overbought: The stock has risen sharply and quickly. May pull back, but strong trends can stay overbought for a long time.

How RSI Is Calculated

RSI = 100 − (100 ÷ (1 + RS)), where RS = average gain over 14 days ÷ average loss over 14 days. RSI was developed by J. Welles Wilder Jr. in 1978 and remains one of the most widely used technical indicators in stock analysis.

How Investors Use RSI

RSI is most useful as a filter, not a buy or sell trigger on its own. Common approaches: combine a low RSI with strong fundamentals (P/E, earnings growth) to find beaten-down quality stocks, or use RSI to time entries into stocks you already want to own.

RSI Limitations

RSI is a momentum indicator — it tells you how fast a stock has moved, not why. A stock can have a low RSI and keep falling if the business is deteriorating. Always combine RSI with fundamental analysis.

See RSI in Action

StocksRankings shows the RSI for every S&P 500 and Nasdaq 100 stock. See which stocks insiders are buying with low RSI readings, or check today's AI picks which factor in RSI as one of many signals.