What is the best RSI setting?

There is no best setting. 14 periods is Wilder's original setting and the one Owl Mastery uses. A shorter period makes RSI react faster and reach 70 or 30 more often, and a longer period smooths it out and makes extremes rarer.

Does an RSI above 70 mean I should sell?

No. A reading of 70 or more means recent gains have been much larger than recent losses. In a strong uptrend RSI can stay above 70 for a long time while price keeps rising, so an overbought reading on its own is not a reason to sell.

Does RSI work on Bitcoin and other crypto?

The formula works on any price series, including crypto. Crypto trades around the clock, so a daily RSI depends on the cut-off time a chart uses for each daily close, and 14 daily bars cover two calendar weeks. Owl Mastery currently covers US stocks and indexes only.

Why does my chart show a different RSI than Owl Mastery?

RSI values differ when the smoothing method, the first date of the calculation or the source of the closing prices differs. Owl Mastery uses Wilder's smoothing over one year of daily bars, with each bar's close taken at the end of the US trading session.

What is RSI? Relative strength index explained

The relative strength index (RSI) is a momentum indicator that compares the size of recent gains with the size of recent losses on a scale from 0 to 100. J. Welles Wilder Jr. introduced it in 1978 with a 14-period setting, and readings of 70 or more are commonly called overbought and 30 or less oversold. Owl Mastery computes Wilder's RSI over 14 daily closes for every US stock and index it covers.

How RSI is calculated

J. Welles Wilder Jr. introduced the relative strength index in his 1978 book New Concepts in Technical Trading Systems. RSI compares the average size of the up moves in a lookback period with the average size of the down moves. Wilder used 14 periods. On a daily chart, that is the last 14 daily closes.

For each day, take the change in the close from the day before. A rise counts as a gain and a fall as a loss, both written as positive numbers. On a day with a gain, the loss is zero, and the other way round.
The first average gain and the first average loss are the means of the first 14 changes.
Each later average is (previous average × 13 + today's gain or loss) / 14. This is Wilder's smoothing.
RS is the average gain divided by the average loss, and RSI = 100 - 100 / (1 + RS). When the period has no losses at all, RSI is 100.

Wilder's smoothing works like an exponential average that gives each new change a weight of one fourteenth. Older changes fade but never drop out entirely. The first RSI value needs 15 closes, because 15 closes give 14 changes.

How Owl Mastery computes RSI

Owl Mastery's RSI (14) is Wilder's RSI over 14 daily closes, computed from each stock's one-year daily bars. The first average gain and loss are the means of the first 14 changes, and each later average is (previous × 13 + change) / 14. Owl Mastery labels a reading of 70 or more Overbought, 30 or less Oversold, and anything between Neutral. The value updates once a day, after each US market close. The methodology lists this formula with every other signal.

What overbought and oversold mean

RSI is a ratio, so each reading says how lopsided recent moves have been. At 50, the average gain equals the average loss. At 70, the average gain is more than twice the average loss.

RSI reading	Owl Mastery label	What it describes
70 or more	Overbought	The average gain is more than twice the average loss. Recent moves have been mostly up.
Above 30 and below 70	Neutral	Gains and losses are closer to balance. At 50 they are equal.
30 or less	Oversold	The average loss is more than twice the average gain. Recent moves have been mostly down.

70 and 30 are the levels Wilder suggested, and they are the thresholds in the glossary. Overbought does not mean price has to fall. It means the recent run has been one-sided.

How to read RSI

Extremes. A reading above 70 or below 30 flags a one-sided run. It prompts a check on whether a move is stretched. It is not a trade signal on its own.
Divergence. Price makes a new high while RSI makes a lower high, or price makes a new low while RSI makes a higher low. The pattern may show momentum fading before price turns, though price can keep going.
The 50 line. Above 50, average gains exceed average losses over the period. A cross of 50 may signal a change in short-term momentum.
Alongside trend signals. RSI says nothing about where price sits against its longer trend. Compare it with the 50-day moving average or the distance from the 52-week high.

The SPX page shows the latest RSI for the S&P 500 index next to the other three signals.

Using RSI on crypto

The formula works on any price series, so RSI on Bitcoin or Ether is calculated the same way. What changes on crypto is what a day means.

No closing bell. Crypto trades 24 hours a day, 7 days a week. A daily bar's close is the last price before a cut-off time that the exchange or chart chooses, such as midnight UTC. Two charts with different cut-offs have different daily closes, and so different RSI values.
14 bars are 14 calendar days. On a US stock, 14 daily bars cover 14 trading days, close to three weeks. On crypto they cover exactly two weeks, weekends included.
More than one price. Each exchange quotes its own price. RSI built from one exchange's candles can differ from RSI built from another exchange or from a price index.

Owl Mastery currently covers US stocks and indexes only, so it shows no crypto RSI. How to read 70, 30, divergence and the 50 line is the same on a crypto chart.

Limits of RSI

It can stay extreme. In a strong trend, RSI can sit above 70 or below 30 for a long time while price keeps moving the same way.
It looks back. RSI describes past closes. It does not forecast the next move.
Once a day. Owl Mastery's RSI uses daily closes and updates after each US close, so it does not change during the trading session.
Inputs change the number. The smoothing method, the first date of the calculation and the source of the closes all move the reading. Compare RSI values only when they come from the same source.