New traders and analysts are taught that when the RSI reaches 70 or higher, it is an opportunity to scale out of a long position or consider a short position. The first lesson taught to new traders and analysis with the RSI is how to trade the overbought and oversold levels. Wilder’s book, he gave a worksheet because most charting was still done by hand. Computers make these calculations now, but in Mr. The calculation itself is simple and readily available in many pieces of charting software. Wilder bounded the RSI to a measurement of 0 to 100, and he assigned a static overbought level at 70 and an oversold level at 30.
The RSI is also one of the indicators people first learn about it is undoubtedly the first momentum oscillator people learn.
Out of the myriad of ideas in his book, none is more well-known or used than the RSI indicator (Relative Strength Index). When Welles Wilder published New Concepts in Technical Trading Systems in 1978, he released a series of new indicators and concepts that took the field of technical analysis to another level.