If you've been reading Allstarcharts you've seen me referencing RSI on a lot of my charts. I want to talk a little bit about the Relative Strength Index and how I use it. You'll notice that I am not an "oscillator junkie". You won't see 27 momentum indicators on my charts. In fact, you will usually just find one: RSI (or the Relative Strength Index). Do not confuse the RSI with "Relative Strength", which shows the performance of one security relative to another (i.e. Financials vs S&P500).

RSI is a momentum indicator that compares the magnitude of recent gains to recent losses in a range between 0-100. Instead of going into how J. Welles Wilder created the oscillator and how it works, I am going to focus on how I use it personally. Stockcharts.com does an incredible job of explaining it's construction and Connie Brown takes RSI to the next level as good as anyone.