RSI Revealed: Leveraging Relative Strength Index for Timing Entries and Exits

The Relative Strength Index (RSI) is a popular technical indicator used by traders and investors to identify overbought and oversold conditions in the market. It is a momentum oscillator that measures the speed and change of price movements. In this tutorial, we will explore the concept of RSI and learn how to leverage it for timing entries and exits in Python.

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Understanding the Relative Strength Index (RSI)

The RSI is calculated using a mathematical formula that compares the average gain and average loss over a specified period of time. The formula for calculating RSI is as follows:

RSI = 100 - (100 / (1 + RS))

Where:

• RS is the average gain divided by the average loss over the specified period.

The RSI ranges from 0 to 100. Traditionally, a value above 70 is considered overbought, indicating a potential reversal or correction in price. Conversely, a value below 30 is considered oversold, indicating a potential upward price movement.

Importing Required Libraries

Before we dive into the implementation of RSI in Python, let’s import the necessary libraries. We will be using the yfinance…