|  DEC 1986

The Relative Strength Index by J. Welles Wilder, Jr.

The Relative Strength Index by J. Welles Wilder, Jr. The Relative Strength Index (RSI) is a tool which can add a new dimension to chart interpretation when plotted in conjunction with a daily bar chart. Some of these interpretative factors are: Tops and bottoms are indicated when the RSI goes above 70 or drops below 30; Chart formations which often show up graphically on the RSI may not be apparent on the bar chart; Failure swings above 70 or below 30 on the RSI scale are strong indications of market reversals; Support and resistance often show up clearly on the RSI before becoming apparent on the bar chart; Divergence between the RSI and price action on the chart is a very strong indication that a market turning point is imminent. Before taking up the equation for calculating the Relative Strength Index, let's examine briefly the momentum concept upon which the RSI is based.

by J. Welles Wilder, Jr.