From Investopedia: RS = 100 - 100/ Average of x days' up closes / Average of x days' down closes I'm math challenged, does "Average" refer to closing price or price change and what if, for a 3 day RSI say, all closes were either up or down? If no down closes how can divisor be zero and work? Thanks anyone.
RSI = 100 * UpAvg / (UpAvg + DnAvg) Where UpAvg is the average positive change over the period and where DnAvg is the average negative change over the period. So if you have RSI(5), and your closes are: 10,11,13,12,11.50 UpAvg = ([-10+11] + [-11+13])/5 DnAvg = ([13-12] + [12-11.50])/5 In this case, your RSI would be: RSI = 100 * 0.6 / (0.6 + 0.3) = 66.67
RSI = wealth transfering indicator (from stupid traders that use it to smart ones who know some stupid ones use it)