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Relative momentum
RSI compares smoothed average gains with smoothed average losses over a selected period.
Lesson · Technical Indicators
Relative Strength Index
Calculate RSI with Wilder smoothing, interpret momentum on a 0–100 scale, test threshold behavior across regimes, and avoid treating overbought or oversold as automatic reversal commands.
Synthetic educational data
Core concepts
Understand what the indicator calculates, how its parameters affect it, and what it cannot establish by itself.
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Bounded scale
The result is normalized between 0 and 100, making momentum states easier to compare across instruments and price levels.
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Context-dependent thresholds
High RSI can persist in a strong uptrend and low RSI can persist in a strong downtrend. Threshold contact alone does not confirm reversal.
Interactive lesson
Change the inputs, inspect the calculation, and compare the indicator with the underlying price data.
PriceSynthetic closes
RSI14-period Wilder RSI
Interpret RSI without shortcuts
Use momentum information as one condition inside a broader market decision.
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Set the period and smoothing
Document the period and confirm that the implementation uses the intended Wilder convention.
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Observe the centerline
RSI above or below 50 can describe the balance of recent gains and losses without requiring an extreme.
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Evaluate threshold persistence
Count how long RSI remains above or below a threshold while price continues or reverses; the lab reports the longest such run in the sample.
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Require price confirmation
Use structure, location, or a defined trigger before converting an RSI observation into a trade decision.
RSI calculation and context
Score 0 / 0Choose the best answer.
Lesson rule
Overbought means recent gains dominate the selected window; oversold means recent losses dominate. Neither word means price must reverse next.
Common mistakes
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Shorting every RSI reading above 70Strong trends can maintain high momentum while price continues higher.
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Buying every reading below 30Low momentum can persist, especially during a strong decline.
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Comparing values with different settings as if identicalPeriod, source, smoothing, and timeframe change the meaning and timing of RSI.
Completion standard
✓
Finish when you can explain an extreme without predicting a reversal.
Calculate the current RSI state, count threshold persistence, compare trend and range scenarios, and identify the price confirmation required by your rule.
Calculation note: This course uses Wilder-style smoothing of gains and losses. Seed values, rounding, source data, and incomplete-bar handling can produce small differences across platforms.