RSI is an oscillator for acceleration, which measures the relative inner strength of the market, not according to another market or index. Like most of the oscillators, this one also provides early signals for overbought and oversold conditions. The formula is:
RSI = 100 —– where
1 + RS
RS = Average increase in prices for the period / Average decline in prices for the period
A signal for oversold condition is given by indicator values below 30, and for overbought – values over 70.