The name "Relative Strength Index" may be somewhat misleading, as it does not compare the relative strength of two securities such as the Relative Strength (RS) indicator does, but rather the internal strength of a single security.Ī popular method of analyzing the RSI is to look for a divergence. AG is the average price gain over some period and AL is the average price drop over some the same period. In mathematical terms, RSI = 100 - 100/(1+RS) where RS is calculated as the ratio of two exponentially smoothed moving averages, AG/AL. The RSI oscillates in a range between 0 and 100 representing a comparison of the magnitude of a stock's recent gains to the magnitude of its recent losses. Welles Wilder and introduced in his 1978 book New Concepts in Technical Trading Systems. The Relative Strength Index (RSI) is a popular price momentum oscillator developed by J.
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