Abbreviation: RSI
Category: Price Momentum Indicators

Input Parameters:

 
Calculation:

100 – 100 / ( 1 + RS )

where
RS = Smoothed Increases / Smoothed Decreases

On nth period

Smoothed Increases = Avg(Gain, n) 

Smoothed Decreases = Avg(Loss, n) 

Every period thereafter

Smoothed Increases = ( Previous Smoothed Increases * (n-1) + Gain ) / n 

Smoothed Decreases = ( Previous Smoothed Decreases * (n-1) + Loss ) / n 

If ( Close > Previous Close ) then

Gain = Close – Previous Close 

Loss = 0 

else if ( Close < Previous Close ) then

Gain = 0 

Loss = Previous Close – Close 

else

Gain = 0 

Loss = 0 

n = Periods

Avg represents Simple Moving Average

 
Discussion:

The Relative Strength Index measures price momentum. Mathematically, the Relative Strength Index ranges between values of 0 and 100. The closer the index is to 100, the stronger the indication of an overbought market. The closer the index is to 0, the stronger the indication of an oversold market. In general, index values above 50 indicate a possible uptrend, while index values below 50 indicate a possible downtrend.
Difference between NeuroShell’s RSI indicator and Wilder’s Original RSI:

Note that NeuroShell’s RSI indicator is based upon TradeStation’s RSI implementation and is therefore different from Wilder’s original. The RSI uses two exponential moving averages (EMAs). NeuroShell Trader’s EMA period has a different meaning as compared to Wilder’s original EMA period, because Wilder used a different type of EMA. Here is how they relate to each other:

NeuroShell Trader’s EMA period = Wilder’s EMA period * 2 – 1 

This applies to both the Periods parameter of the RSI indicator.

For example, suppose you want to match Wilder’s indicator using a period of 14 bars. To be able to re-create the results in NeuroShell Trader, you should use 14*2-1=27 bar period for the RSI periods.

NeuroShell Trader’s version of RSI matches Wilder’s when you use (Wilder’s EMA period * 2 – 1) value for the period parameter.