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Relative Strength Index

Relative Strength Index Definition

A technical analysis indicator that compares the days that a stock finishes up against when it finishes lower.

The RSI ranges from 0 to 100, but a stock is considered overbought if it reaches the 70 level, meaning that you should consider selling. When it is a true bull market, an RSI of 80 might be a better level since stocks often trade at higher valuations. Likewise, if the RSI approaches 30, it is a strong buying indicator (20 in a strong bear market).

Big surges and drops in stocks will effect the RSI, but it could just be a false buy or sell. The RSI is best used as a valuable compliment to your other stock picking tools.

RELATED TERMS
MACD
Technical Indicator
RELATED CATEGORIES
Technical Analysis







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