NISM Certifications · NISM-Series-XV: Research Analyst · Technical Analysis
A 14-period RSI is computed with average gain of 1.5 and average loss of 0.5 over the period. What is the RSI value?
The RSI is 75. Relative strength is average gain divided by average loss, 1.5 divided by 0.5, which equals 3. RSI equals 100 minus 100 divided by (1 plus 3), giving 100 minus 25, or 75, which is in overbought territory above 70.
- A75Correct
- B66.7
- C25
- D90
Explanation
RS = 1.5/0.5 = 3. RSI = 100 - 100/(1+3) = 100 - 25 = 75. Working back: 75 implies RS of 75/25 = 3, which matches. The value 25 results from using 100/(1+RS) without subtracting from 100.
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