Relative Strength Index
RSI is another momentum indicator and probably one of the best known. Created by J Wilder it was first introduced in his book New Concepts in Technical Trading Systems, 1978.
The RSI compares the magnitude of securities recent gains to recent losses creating overbought and oversold signals. The information is plotted with a range of 0 to 100. Movement over the 70 line is considered overbought and movement below the 30 line is considered oversold.
As in all of the other indicators TradeWithPros utilizes, traders look for divergence, trendline breaks and patterns in the RSI indicator to assist in trading decisions. Do not use this indicator solely on its own.
Below is IBM with an RSI.
