Stocks & Commodities V. 26:4 (44-47): RSI Bands by Francois Bertrand

Stocks & Commodities V. 26:4 (44-47): RSI Bands by Francois Bertrand
Item# \V26\C04\067BERT.PDF
Availability: In Stock

Product Description

RSI Bands by Francois Bertrand

In this twist on the traditional relative strength index, find out how it can be used as a visual analytical tool and with other technical indicators.

The relative strength index (RSI) is a popular indicator to evaluate if a stock is overbought or oversold. However, its values range from zero to 100 and must be evaluated in a separate window, making its correlation with price and trends more difficult than other indicators that are overlaid directly on price charts such as the Bollinger bands.

In this article I present a way of calculating RSI bands, which trace RSI overbought/oversold levels directly over price data, making this indicator more intuitive to use and opening up new analysis and signaling possibilities.


RSI bands are calculated by answering the question, “What price should the stock have to reach today to be considered overbought/oversold, given yesterday’s RSI?”

Each band corresponds to a certain level. Typically, 70 and 30 have been used as overbought/oversold levels, so we would draw one band for 70 and one band for 30. Because calculations are based on the original RSI calculations, bands can be drawn for any level and any period of time. If given extreme values (such as a very short period), however, the bands get very volatile. The addition of an optional clamping algorithm solves that problem.

The code used to calculate RSI bands can be found in the sidebar “AmiBroker code for calculating RSI bands.”

*Note: $2.95-$5.95 Articles are in PDF format only. No hard copy of the article(s) will be delivered. During checkout, click the "Download Now" button to immediately receive your article(s) purchase. STOCKS & COMMODITIES magazine is delivered via mail. After paying for your subscription at users can view the S&C Digital Edition in the subscriber's section on

Take Control of Your Trading.
Professional Traders' Starter Kit
All these items shown below only $299.99!
  • 5-year subscription to Technical Analysis of STOCKS & COMMODITIES, The Traders' magazine. (Shipping outside the US is extra. Washington state addresses require sales tax based on your locale.)
  • 5 year access to S&C Archive
  • 5 year access to S&C Digital Edition
  • 5-year subscription to Advantage.
  • 5-year subscription to Working Money.
  • Free book selection.
  • Click Here to Order