Relative Strength Index (RSI)
factor.formula
Upward Momentum (UM):
Downward Momentum (DM):
Average Upward Momentum (UA, N days):
Downward Momentum Average (DA, N-day):
Relative Strength Index (RSI):
UA initial value:
DA initial value:
Default period:
in:
- :
Closing price at time t
- :
The closing price at time t-1, i.e. the closing price of the previous day
- :
The upward momentum at time t is defined as the difference between the closing price of the day and the closing price of the previous day. If the difference is positive, it is the difference; if the difference is negative, it is 0, that is, only the increase is recorded.
- :
The downward momentum at time t is defined as the difference between the previous day's closing price and the current day's closing price. If the difference is positive, it is the difference; if the difference is negative, it is 0, that is, only the magnitude of the decline is recorded.
- :
The N-day average of rising momentum at time t, calculated using smoothed moving average
- :
The N-day average of the downward momentum at time t, calculated using the smoothed moving average
- :
The N-day simple moving average of X is used as the initial value calculation method of UA and DA
- :
The calculation period is usually set to 14, which means calculating the momentum of the last 14 trading days.
factor.explanation
The value of the Relative Strength Index (RSI) fluctuates between 0 and 100. Usually, the RSI value fluctuates between 30 and 70, but it is not absolute. When the RSI value is above 70, the market is generally considered to be overbought, and the price may face the pressure of a pullback. At this time, traders need to be alert to the possible decline of the market. On the contrary, when the RSI value is below 30, the market is generally considered to be oversold, and the price may be about to rebound. At this time, traders can pay attention to potential buying opportunities. It should be noted that the RSI indicator is not used independently, and needs to be combined with other technical indicators and market analysis to more accurately judge the market trend. In addition, the overbought and oversold thresholds of RSI can be adjusted according to the specific situation. For example, some traders use 80 and 20 as the overbought and oversold thresholds.