A longer term RSI is more rolling and fluctuates a lot less. The shorter number of days used, the more volatile the RSI is and the more often it will hit extremes. Again, some make the adjustment to 20 in a bear market. Likewise, if the RSI approaches 30 a stock is considered oversold. This number is not written in stone - in a bull market some believe that 80 is a better level to indicate an overbought stock since stocks often trade at higher valuations during bull markets. A stock is considered overbought around the 70 level. (Don't worry, most likely, you will never have to do this manually). It is calculated with the following formula. The RSI is a reasonably simple indicator that anyone can use. This indicator is a popular tool in momentum trading. The RSI is a comparison between the days that a stock finishes up against the days it finishes down. When talking about the strength of a stock there are a few different interpretations, one of which is the Relative Strength Index (RSI).
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