RSI
Technical indicator measuring the speed and strength of price movements (0–100).
RSI (Relative Strength Index) is a technical momentum oscillator that measures the speed and strength of price moves on a 0-100 scale. Developed by J. Welles Wilder in 1978, it's one of the most widely used momentum indicators in technical analysis.
Traditionally, values below 30 indicate oversold (price has moved down rapidly and is theoretically "due" for a bounce), values above 70 indicate overbought (price has moved up rapidly and is theoretically "due" for a correction). The 30/70 thresholds are conventional, not absolute: many traders use 20/80 for tighter filtering.
Worked example
Nvidia (NVDA) on May 17, 2026 has daily RSI at 28. Over the last 14 days, the average positive return was 0.3% and the average negative return was 1.4%. RS = 0.3 / 1.4 = 0.214. RSI = 100 − [100 ÷ (1 + 0.214)] = 100 − 82.4 = 17.6 — deeply oversold.
For context, the S&P 500 at the same moment has RSI at 52, in neutral territory. An individual stock with RSI 28 while its benchmark is at 52 is underperforming the market in the short term. It's descriptive information, not a buy signal: stocks can remain oversold for weeks in bearish markets.
When it's used
RSI is one of the inputs to Lucex's Entry Zone. Independently, it's one of the most-read indicators by retail and professional traders. Three typical uses: identifying overbought/oversold conditions (RSI < 30 or > 70), spotting divergences (price making new lows while RSI doesn't — a sign of exhaustion in the decline, not guaranteed), comparing the relative strength of different stocks (a stock with RSI 60 in a market at 50 is relatively strong).
Limits
RSI is a secondary indicator, not predictive. Stocks in strong trends can stay "overbought" (RSI > 70) for weeks or months without correcting — see NVDA in 2024. Similarly, stocks in structural deterioration can stay oversold for a long time. The absolute RSI level matters less than its evolution and context: best read together with volume, moving averages and fundamentals.
Frequently asked
Does RSI below 30 mean I should buy?
No. RSI in oversold describes an observable technical condition ("price has moved down rapidly"), it does not generate a buy recommendation. Stocks can remain oversold for weeks, and oversold on a stock with deteriorating fundamentals doesn't translate into a bounce.
Which RSI period is best?
Wilder's standard is 14 periods (days on a daily chart). Shorter periods (e.g., 9) make RSI more reactive but noisier. Longer (e.g., 21) smooth it but delay signals. Lucex uses 14 days by default — the industry standard.
Does RSI work better on some types of stocks?
It works best on stocks with good liquidity and regular price moves. On illiquid names, micro-caps, or stocks with frequent gaps, RSI is noisy and less informative. On the VIX or on speculative names it should be treated with caution.
Related terms
Educational definition. Not financial advice.