Northspread
Formula sheet/NISM Series XV: Research Analyst/Technical Analysis
[ TECHNICAL ANALYSIS ]

Relative Strength Index (RSI)

RSI=100−[100/(1+RS)]RSI = 100 - [ 100 / (1 + RS) ]
RS=Average Gain over n periodsAverage Loss over n periodsRS = \dfrac{\text{Average Gain over n periods}}{\text{Average Loss over n periods}}
Variables

Standard period: n = 14 bars. Overbought zone: RSI > 70; Oversold zone: RSI < 30.

Exam note

Bull market floor typically holds at RSI 40-45; bear market ceiling typically caps at RSI 55-60.

Worked example
Relative Strength Index (RSI) Calculation

Over a 14-day lookback period, a stock's average daily gain on up-days is Rs 18.00 and its average daily loss on down-days is Rs 6.00. Calculate the Relative Strength (RS) and the 14-period RSI.