The Relative Strength Index (RSI) is a technical analysis tool used to assess the momentum of price action and identify overbought or oversold levels in a market. It is calculated using a scale ranging from 0 to 100.
### Basic formula:
RSI = 100 - [100 / (1 + (Average Profit / Average Loss))]
### Interpretations:
- If the RSI is above 70, it indicates that the stock or asset may be in the overbought zone and there may be a correction or decline in price.
- If the RSI is below 30, it means that the asset may be in the oversold zone and there may be a potential bounce or rise in price.
### Usage:
- RSI is used to determine entry and exit points of trading.
- It can be used with other indicators to improve the accuracy of the analysis.
Would you like to know more about how it is calculated in detail or how to apply it to a specific financial instrument?
