Definition
Plain language
A stock-chart number meant to show whether a price has been rising or falling hard recently.
As stated in the literature
Relative Strength Index: a bounded momentum oscillator computed from the ratio of average recent gains to average recent losses over a lookback window, conventionally fourteen periods.
Also called: Relative Strength Index, fourteen-day RSI
Why it matters: Because it is instantly recognizable as "serious" financial data, an RSI number lends credibility to a display whether or not the underlying prices are real.
For example, a chart might show a stock's RSI at 78 and a trader would read that as the price having climbed sharply and possibly being due for a pullback.
Heard on the show
“Indicators like RSI and MACD aren’t literally noise.”Episode 251 — When a Fake Dashboard Makes an AI Agent Just as Confident