
Wilder recommended application of RSI measured for 14 days, but also periods for 9 and 25 days are often mentioned. This index is calculated based on relation of average value of positive growth of close price of bar (in relation to close price of previous bar) to total amount of price increment. At the period of 14 days the index expresses an average value of all positive increments in price, then – it shows an average value of all negative increments.
Essentially, RSI is exactly the relation between average value of positive growth of close price to the sum of average values of positive and negative increments. RSI fluctuates within the range from 0 to 100, because average value of the index is multiplied to 100. The shorter applied period for this indicator is, the more sensitive towards price fluctuations it gets.