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RSI is a momentum indicator that compares recent gains and losses, in order to determine if an asset is overbought or oversold.
The formula for calculating RSI is:
RSI = 100 – 100/(1 + RS*)
*Where RS = Average of x days’ up closes / Average of x days’ down closes.
Traders that uses RSI knows that the big problems is when large surges and drop in the price can cause the RSI to show false buy or sell signals.
Relative Strength Index in algo-trading (With Expert advisor)
RSI is a valuable complement in EA’s strategies. If an EA can determine a RSI of an asset, the process of buying and selling will be more accurate and will the trader gain more profit.
Screenshot of Relative Strength Index as it looks inside the mt4 metatrader
Taken from – investopedia.com