Relative Strength Index (RSI): formula and how to read it

Recent buying momentum; 50–70 is healthy. Wilder 14-day RSI. The default scoring target is 50–70.

Stock Meadow groups it under Price trend, and shows it in tables as RSI 14.

RSI = 100 − 100 ÷ (1 + average gain ÷ average loss), using Wilder's smoothing over 14 days

If average daily gains are twice the average daily losses, RSI = 100 − 100 ÷ 3 ≈ 66.7. The numbers are made up for illustration.

Traders often read above 70 as overbought and below 30 as oversold. Stock Meadow's scoring target is 50–70, which scores 100; each point outside that range loses 5 points.

Stock Meadow scores it against a target range of 50.0 to 70.0: inside the range scores 100, and each unit outside it costs points.

• A strong trend can stay above 70 for a long time, so overbought does not mean about to fall.
• It is a short-term indicator and says nothing about value.
• Not the same as the relative strength comparison against the S&P 500.

Treat any single metric as one clue, and read the company's financial statements before drawing a conclusion. Stock Meadow's figures are research tools based on reported data, not investment advice.

In Weighted ranking, Z-score composite and Balanced (no weak link), you choose the metrics and weights yourself, so you can include it in a custom score.

No fixed-recipe model scores it.

Read about every scoring model on the scoring models page.

• Six-Month Relative Strength: six-month return compared with the S&P 500.
• Price vs. 200-Day Moving Average: how far the price sits above its long-term trend.
• 12-1 Momentum: last year's return, ignoring the most recent month.

What is a good RSI?

RSI of 50–70 reflects healthy buying momentum without being stretched, and is the range Stock Meadow's scoring prefers. Traditionally, above 70 is called overbought and below 30 oversold.

Is a higher or lower RSI 14 better?

Stock Meadow scores it against a target range of 50.0 to 70.0: inside the range scores 100, and each unit outside it costs points. That is a ranking convention, so read RSI 14 alongside other measures and compare similar companies.