Relative Strength Index (RSI) Formula
The RSI formula is relatively simple. You just need to understand the concept of Relative Strength and understand how to sum up and average up and down moves of the market for which you want to calculate RSI.
RSI = 100 – 100 / ( 1 + RS )
RS = Relative Strength = U / D
U = average of all positive moves in the last N price bars
D = average of (absolute values of) all negative moves in the last N price bars
N = the period of RSI
How to Calculate RSI
A detailed step by step guide how to calculate RSI, with a detailed decomposition of the RSI formula, is here: RSI Calculation.
RSI Values
RSI can reach values from 0 to 100. It is quite obvious from the RSI formula. You use absolute values for average negative move calculation, therefore Relative Strength is always positive, the denominator at the end of the RSI formula ( 1 + RS ) is always greater than 1, and the result of RSI formula is never negative and never greater than 100.