![]() When the price moves up quickly with little to no pullbacks, your average gain is large because the price is making positive gains-which leads to a higher RSI value. “How does the value of the average gain goes up? In other words, the RSI indicator goes up when the average gain is large (or when the average loss is small). Let’s get started… How does the RSI indicator work?Īs you can see, the only “tricky” thing is the RS calculation which is defined as… I’ll break this down that even a 10-year-old can understand. This means the faster the price goes up, the higher the RSI value (and vice versa).ĭon’t let the math scare you because this isn’t as “scary” as it looks. It oscillates between 0 and 100 and the purpose is to measure the “speed” of a price movement. The RSI (relative strength index) is a momentum indicator developed by J. What is RSI indicator and how does it work? ![]()
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