RSI (Relative Strength Index)
A 0–100 momentum oscillator comparing average gains to average losses over a lookback, by default 14 periods.
Also called: relative strength index · RSI 14 · RSI indicator
What it means
RSI measures the balance between up-closes and down-closes over its lookback and reports it on a fixed 0–100 scale. Readings above 70 are conventionally called overbought and below 30 oversold.
Those labels are where most of the misuse starts. In a strong trend RSI can sit above 70 for weeks while price keeps rising — the reading is describing strong momentum, not a reversal. The overbought and oversold framing only means what it is usually taken to mean inside a range.
Wilder's original smoothing is not a simple moving average. It is a recursive average, which makes RSI respond more slowly than an SMA-based version — a real numerical difference, not a notational one, and a frequent source of disagreement between two tools claiming to plot the same indicator.
How OptionLab Pro’s engine uses it
In the live engine
We compute Wilder RSI(14) specifically — the recursive smoothing, not an SMA variant — and the figure in the live widget is the same number the engine votes on. RSI is one of seven indicator states inside the indicator engine, which carries a 0.45 default weight against candlestick at 0.28 and smart money at 0.27. An RSI reading opposing a confirmed EMA trend is discounted to 0.65x, but only in strong_trend and trending regimes, never in a range.
go/internal/engine/indicators.go (Wilder RSI) · production.go (counter-trend discount)The common mistake
Where traders get this wrong
Shorting because RSI crossed 70. In a trending regime that is a momentum confirmation, and acting on it as a reversal signal is how traders fight trends. This is also why a single indicator reading is a weak input on its own: the same number means different things in different regimes.
Go deeper
There is a full lesson on this in the Academy, with an interactive widget and a Hindi translation.
Related terms
Educational and analytical content only. OptionLab Pro is not a SEBI-registered investment adviser or research analyst and does not give buy or sell recommendations. Derivatives trading carries a high risk of loss.