RSI (Relative Strength Index)
A momentum oscillator measuring whether a stock is overbought or oversold.
Definition
The Relative Strength Index (RSI) is a momentum oscillator that measures the speed and magnitude of recent price changes on a scale from 0 to 100. Developed by J. Welles Wilder, it helps identify when a stock may have moved too far, too fast in either direction. Assetick calculates RSI over a 14-day period for every DSE stock.
How it is calculated
RSI is derived from the average gains and average losses over the chosen period, typically 14 days. The formula compares the magnitude of recent up-moves to recent down-moves, then normalises the result onto a 0–100 scale. You do not need to compute it by hand — it appears on every stock's detail page.
How to read it
An RSI above 70 traditionally signals an overbought condition, where a pullback may follow. An RSI below 30 signals oversold, where a bounce may follow. A cross above 50 is often read as building bullish momentum. These are signals, not certainties — a strong stock can stay overbought for a long time.
For DSE investors
On the DSE, thinly traded stocks can produce erratic RSI readings because a few trades move the price sharply. RSI is most reliable on liquid, actively traded shares. Assetick's scanner includes an 'RSI below 30' preset to surface potentially oversold DSE stocks in one click.
Frequently asked questions
What is a good RSI value?+
There is no single 'good' value. RSI between 30 and 70 is considered a normal range. Below 30 suggests oversold and above 70 suggests overbought, but context matters more than the number alone.
Does RSI work on the DSE?+
Yes, RSI works on any market with sufficient trading activity. It is most reliable on liquid DSE shares and less dependable on thinly traded stocks where a few trades distort the price.