What RSI actually measures (and why 30/70 isn't a law of nature)
One moment isn’t momentum
Picture a tennis player deep in a tight third set. Ask “is she playing well right now,” and the outcome of her last point alone tells you almost nothing. Ask instead “over her last twenty points, has she won more than she’s lost, or the other way around,” and you learn something real about her momentum.
You can use RSI to ask that second question about price. The RSI indicator never factors in price itself. It only tracks the pattern of recent price moves, and reports whether the ups or the downs have been dominating.
What the number is actually built from
RSI stands for Relative Strength Index, and despite the intimidating name, the mechanism underneath is plain. Over a stretch of price history, typically 14 candles, RSI adds up the size of every up move and every down move separately, then compares the two averages. A high reading, close to 100, means recent up moves have swamped recent down moves. A low reading, close to 0, means the opposite. Fifty sits in the middle, where up moves and down moves have roughly balanced out.
That comparison gets smoothed the same way a moving average smooths price, so one sharp candle doesn’t swing the number wildly. The smoothing method, developed by J. Welles Wilder in 1978, is the actual technical detail worth remembering if you ever want to check someone’s math. Everything else is just that comparison, expressed as a number between 0 and 100.
Why 30 and 70, and why 14
Fourteen periods and the 30/70 split are Wilder’s own original defaults, not a rule discovered in the market’s own behavior. He picked fourteen because it matched the trading calendars common in his era, and he called anything above 70 “overbought” and anything below 30 “oversold” because those were the levels where, in his own testing, price tended to pause or reverse.
Decades of use turned those two numbers into shorthand nearly everyone recognizes, which is genuinely useful: a shared vocabulary is worth something on its own. But a shorter stretch of price history reacts faster and swings harder; a longer one moves slower and smooths more. A 20/80 split flags fewer moments, with more conviction behind each one. None of these choices are wrong. They’re trade-offs, and the popularity of 14/30/70 is history, not proof.
Never trust RSI alone
RSI doesn’t measure what price is doing right now. RSI only calculates how recent upward moves compare to recent downward moves. That’s exactly why RSI works well as a second opinion and poorly as a standalone signal: price can drop sharply while RSI is still nowhere near oversold, and price can sit flat while RSI drifts because of moves that happened days earlier.
Used alone, RSI tells you whether momentum has recently favored buyers or sellers. Paired with an actual price trigger, the question gets sharper: now that price has moved the way you care about, does momentum actually back that move up, or is this a shallow wobble? That second question is the useful one, and it needs a price trigger sitting next to RSI to even make sense.
The takeaway
RSI is a momentum count dressed up as a mysterious oscillator: fourteen candles, ups against downs, a number between 0 and 100. Thirty and seventy are conventions worth knowing, not thresholds the market has ever promised to respect.
Aurono Start is currently testing RSI as exactly that kind of second opinion: an optional condition that checks momentum after a price trigger fires, never a trigger on its own. It’s working through pre-release testing right now.
Aurono lets you define the rules and runs them on your own device. When a new condition like this ships, it shows up everywhere your strategy explains itself: the pipeline, the summary sentence, the audit trail.
Try Aurono for free in shadow mode. A €99 license unlocks live trading.