What is RSI, and how do traders use it?
The Relative Strength Index (RSI) measures the speed and magnitude of recent price changes to evaluate whether a stock is overbought or oversold. Developed by J. Welles Wilder Jr. in 1978, it's one of the most widely used momentum oscillators in technical analysis.
How RSI is calculated
RSI is computed from the average gain and average loss over a 14-session lookback period (the standard). The formula: RSI = 100 − (100 / (1 + RS)), where RS = Average Gain / Average Loss over the period. Values range from 0 to 100.
Reading RSI values
RSI above 70 is traditionally considered overbought — the stock has risen sharply and may be due for a pullback. RSI below 30 is considered oversold — the stock has fallen sharply and may be due for a bounce. Values between 30 and 70 represent neutral momentum, with 50 as the midpoint separating mild bullish (above) from mild bearish (below) bias.
RSI divergence
One of RSI's more powerful applications is divergence — when price makes a new high but RSI fails to confirm with a new high of its own (bearish divergence), or when price makes a new low but RSI doesn't (bullish divergence). Divergence can signal that a trend is losing momentum before price confirms it.
RSI in the context of trend
In a strong uptrend, RSI often stays in the 50–80 zone without reaching 30. The 'oversold' signal (below 30) in a downtrend may simply reflect the strength of the move, not an imminent reversal. Many traders adjust the thresholds to 80/20 in trending markets and use the 50-level as a trend filter.
How Vantra uses RSI
Vantra computes RSI (14-period) from full OHLCV history for every ticker searched. It identifies the RSI zone (overbought, oversold, neutral bullish, neutral bearish) and uses it as one of the dimensions in the Historical Pattern Engine — finding prior sessions where RSI was in the same zone, with the same MACD bias and trend direction, and reporting what price did 7, 30, and 90 sessions later.
See live RSI on any ticker
Vantra computes this and 11 other indicators live from real OHLCV data — plus the Historical Pattern Engine to show what happened under similar conditions before.
Start for free — no card required →Frequently asked questions
What is a good RSI level to buy at?
There is no universal 'good' RSI level — it depends on the broader trend, the stock's historical behavior, and your trading style. RSI below 30 (oversold) in an otherwise uptrending stock is a common signal, but RSI below 30 in a downtrending stock can simply reflect the trend's strength. Always combine RSI with trend context.
Is RSI 14 the best setting?
RSI 14 (14-period) is the standard recommended by its creator and the most widely cited. Shorter periods (RSI 7 or 9) react faster but generate more false signals. Longer periods (RSI 21 or 25) are smoother but slower. For most research purposes, RSI 14 is the appropriate baseline.
What is RSI divergence?
RSI divergence occurs when price and RSI move in opposite directions. Bearish divergence: price makes a new high, RSI makes a lower high — suggesting the rally is losing momentum. Bullish divergence: price makes a new low, RSI makes a higher low — suggesting the selloff may be exhausting.