What does it measure?
RSI compares recent gains and losses to express price momentum on a 0–100 scale. It does not value a business or forecast returns.
How to read it
70 and 30 are common overbought and oversold reference levels. Strong trends can hold extreme readings, so crossing a threshold does not establish a reversal.
RSI = 100 − 100 / (1 + RS)Hypothetical calculation
If consistently smoothed average gain is 2 and average loss is 1, RS=2 and RSI is about 66.67. A 14-period daily RSI uses daily bars; an hourly RSI uses hourly bars.
Before using it
Check length, price source and whether the bar has closed. When testing a rule, record fees and failed signals too.
Check on your chart
Keep the symbol and timeframe fixed and record your settings. Compare an updating bar with a closed bar. This exercise is not a trade recommendation.
Does RSI 70 mean sell?
No. RSI 70 describes recent momentum relative to the chosen period, not a sale instruction or a guaranteed reversal. For an illustrative average gain of 3 and average loss of 1, RS=3 and RSI=100−100/(1+3)=75. A shorter length responds to a different window; it is not automatically more accurate. Compare closed candles with the same symbol, price source, timeframe and smoothing method.