Indicators

RSI: How to Set Up and Use the Relative Strength Index

Astron Team · 09/24/2026 · 4 min read

Few indicators are as popular as the RSI, or relative strength index. It shows up on the vast majority of charting platforms, is easy to set up, and its basic reading — overbought and oversold — is usually one of the first things a beginner trader learns. But there's more to the RSI than just watching whether it's above 70 or below 30.

In this article, you'll understand how the RSI is calculated, how to set it up correctly, and how to use its main readings, including divergence between the indicator and the price.

What the RSI is and how it's calculated

The RSI measures the speed and intensity of price changes over a given period, usually 14 candles, resulting in a value that ranges from 0 to 100. The calculation compares the average of gains with the average of losses over that period: the higher the ratio of gains to losses, the closer the RSI gets to 100; the higher the ratio of losses, the closer to 0.

In simplified terms, the formula is RSI = 100 − [100 / (1 + RS)], where RS is the relative strength, calculated by dividing the average gain by the average loss over the chosen period. If, over the last 14 candles, the average gain was R$ 0.80 per up candle and the average loss was R$ 0.40 per down candle, the relative strength would be 2 (0.80 divided by 0.40), which would result in an RSI of approximately 67 — still below the overbought zone, but already indicating buyer dominance.

Setting the RSI's period

The default 14-candle period works well as a starting point, but it isn't a fixed rule. Shorter periods, like 7, make the RSI more sensitive, generating overbought and oversold signals more often — which can be useful for shorter-term trades, but also generates more false signals. Longer periods, like 21, smooth out the indicator and reduce the number of signals, making them potentially more reliable, but more delayed.

The choice of period should follow the timeframe and trading style: those trading minute charts tend to prefer shorter periods, while those trading daily or weekly charts usually keep the default of 14 or even increase that number.

Overbought and oversold

The best-known RSI reading uses the 70 and 30 lines as reference: values above 70 indicate an overbought condition, suggesting the rally may be stretched; values below 30 indicate oversold, suggesting the decline may be exaggerated. These readings don't mean the price will reverse immediately — in a strong trend, the RSI can stay above 70 (or below 30) for quite a while before any correction.

Because of that, these zones work best as an attention alert rather than an automatic trigger for a counter-trend entry, especially on assets with strong, prolonged trends.

Divergences: the RSI's more advanced reading

A divergence happens when price and RSI move in opposite directions. If the price makes a new high, but the RSI makes a lower high than the previous one, that's a bearish divergence: despite the price rising, the momentum behind that rise is weakening, which can precede a reversal or at least a pause in the trend.

The opposite also applies: price making lower lows while the RSI makes higher lows is a bullish divergence, suggesting selling pressure is losing strength even while the price is still falling. Divergences tend to be more robust signals than the simple overbought and oversold reading, but they still need confirmation from the price itself before justifying a trade.

Using the RSI in practice

The RSI works best combined with a trend reading: using its overbought and oversold readings in favor of the bigger trend, not against it, tends to generate more consistent results. On Astron, you can adjust the RSI's period and test different settings on different assets until you find the one that best reflects that market's behavior. Like any indicator based on past prices, the RSI doesn't guarantee being right, and every trade carries real risk of loss.