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TRADING • Momentum Oscillators
Relative Strength Index (RSI): Definition, Formula, Trading Strategies & Divergence
Master the Relative Strength Index (RSI) — exact Wilder calculation formula, overbought and oversold thresholds, bullish/bearish divergence patterns, and failure swings.
By Zachary 'Zach' Cole, CMT • Reviewed by Lauren Cross, CMT, Series 7/63 • November 4, 2026
Key Takeaways
- Developed by J. Welles Wilder Jr. in 1978, RSI measures price momentum over a default 14-period lookback window.
- Values above 70 indicate overbought conditions susceptible to pullbacks; values below 30 signal oversold conditions ripe for mean reversion.
- Bullish and bearish divergences between price action and RSI oscillator peaks provide high-probability trend reversal signals.
- In strong persistent secular trends, RSI can remain pinned in overbought or oversold territory for extended periods without reversing.
Core Technical Indicators Quant Benchmarks
Relative Strength Index (RSI) 14 Period
Overbought / Oversold 70 / 30 Thresholds
MACD Standard Parameters 12, 26, 9
Fast, Slow, Signal EMA Exponential
Golden Cross Benchmark 50 SMA > 200 SMA
Macro Bullish Trend Daily Chart Standard
Essential Trading & Technical Analysis Guides
Trading & Technicals
Moving Average Crossover: Golden Cross, Death Cross, and Trading Rules
Understand moving average crossover strategies, how the 50-day and 200-day Golden Cross and Death Cross work, mathematical formulas, and risk management.
By Samantha Reynolds, CFA
Trading & Technicals
Relative Strength Index (RSI): Definition, Formula, Trading Strategies & Divergence
Master the Relative Strength Index (RSI) — exact Wilder calculation formula, overbought and oversold thresholds, bullish/bearish divergence patterns, and failure swings.
By Zachary 'Zach' Cole, CMT
Trading & Technicals
Moving Average Convergence Divergence (MACD): Definition, Formula, and Trading Rules
Master the MACD indicator — mathematical formula, standard 12/26/9 parameters, signal line crossovers, histogram dynamics, divergences, and technical trading strategies.
By Zachary 'Zach' Cole, CMT