14 Day RSI Overbought

What is the definition of 14 Day RSI Overbought?

Developed J. Welles Wilder, RSI is a technical momentum indicator that compares the magnitude of recent gains to recent losses in an attempt to determine overbought and oversold conditions of an asset. Specifically: RSI = 100 - 100/(1 + RS) where RS = Average of x days' up closes / Average of x days' down closes.

An asset is deemed to be overbought once the RSI exceeds the 70 level, meaning that it may be getting overvalued and is a good candidate for a pullback.


Stockopedia explains 14 Day RSI Overbought...

RSI uses all the price changes that occur over a given period in order to derive the average price change. We discuss its application in more detail here.

This RSI calculation is based on 14 days, which is the default suggested by Wilder in his book. We also run a much longer timeframe 28-week RSI based on the backtesting by Richard Tortoriello in the excellent book 'Quantitative Strategies for Achieving Alpha'.



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