Relative Strength Index (RSI) Indicator Explained With Examples, Strategies, and a little bit of Code

James Hinton
7 min readMar 27

The Relative Strength Index (RSI) is a popular indicator used by traders to identify overbought or oversold conditions. This great little technical indicator can be used across almost any financial market, including securities, stocks, cryptocurrency, forex, and futures.

In this article, I’ll be diving deeper into this powerful indicator to explore how it can be used to level up your trading strategies.

Update August 2023

I could never have anticipated how popular this blog, along with a YouTube channel would become.

After a listening to my readers/viewers feedback, I realized that many people were spending huge amounts of time trying to solve installation/configuration problems — rather than experiencing the joy of algorithmic trading.

I want to change this narrative — and in so doing, open up algorithmic trading for everyone.

To do this, I’ve recently launched Tradeoxy: Trading For Everyone.

If you’re reading this, Tradeoxy will simplify 90% of this series, using a series of powerful API’s and easy to use tooling.

Currently it’s in the early-access / building stage and I’d be incredibly grateful if you’d join us on this adventure. Your feedback will help us shape a better product.

Join the early access program (for free) here.

You can also view our launch video, and follow our journey on LinkedIn, Twitter, Instagram, YouTube.

What Is the Relative Strength Index?

The RSI measures recent price changes by oscillating between 0–100. As a technical indicator, it is classified as a Momentum Indicator, meaning that traders use it to determine the pricing momentum of a given financial instrument.

The RSI was developed by a technical analyst, J Welles Wilder Jr, and introduced in his 1978 book, New Concepts in Technical Trading Systems.

How does the RSI indicator work?

The RSI charts the relative price movements of a financial instrument, using a normalized scale of 0–100. The normalization process of the RSI means that the RSI levels used in technical analysis are consistent. No matter what financial instrument the RSI…

James Hinton

Passionate algorithmic trader and Cyber Security expert. Love developing helpful content.

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