Glossary · Technical Analysis
RSI
A momentum indicator used in technical analysis that measures the speed and magnitude of price changes on a scale of 0 to 100. An RSI above 70 is typically interpreted as overbought, while an RSI below 30 suggests oversold conditions.
01—What is RSI?
The definition — and what it means in practice.
RSI (Relative Strength Index) is a momentum indicator in technical analysis that measures the speed and size of recent price changes on a scale from 0 to 100. It is commonly used to judge whether a price move may be stretched. An RSI above 70 is typically interpreted as overbought, while an RSI below 30 suggests oversold conditions. Readings in between are generally treated as neutral.
RSI matters because it can help you put a number on market momentum rather than relying only on instinct. Investors often use RSI to spot potential exhaustion after strong rallies or sell-offs, to compare momentum across different shares, or to watch for changes in behaviour when price makes new highs or lows. RSI is not a guarantee of reversals, so it is usually combined with trend and risk-management tools.
If a share’s RSI is 75 after a sharp rise, some traders treat it as “overbought”; if it’s 25 after a fall, they treat it as “oversold”.
RSI = 100 − [100 ÷ (1 + RS)], where RS = Average Gain ÷ Average Loss (over a set period, often 14 sessions)
Inputs: average up-moves and down-moves over the chosen lookback period; charting tools usually compute this automatically.
- RSI is a 0–100 momentum gauge based on recent price changes.
- Above 70 is commonly read as overbought; below 30 as oversold.
- RSI can stay extreme for long periods during strong trends.
- RSI is often used with trend, support/resistance, and risk controls, not alone.
- Different lookback periods change sensitivity: shorter reacts faster, longer is smoother.
02—How rsi works on the PSX
The Pakistan-specific rules, conventions, and numbers.
PSX investors typically see RSI on brokerage charts and screeners alongside price and volume. It is used on individual shares and on indices such as the KSE-100, KSE-30, and Shariah benchmarks like the KMI-30. Because RSI is derived from price changes, any chart built from PSX trading data can display it for the timeframe you choose (for example, daily or weekly candles).
In practice, RSI on the PSX is often discussed when prices approach their daily price limits (circuit breakers) or when a share has had a string of strong up or down sessions. Those limits can affect how quickly prices move within a day, which can influence short-term momentum readings. RSI is still only an indicator: it describes what price has been doing, and it does not override trading mechanics such as order-book liquidity or settlement (T+1).
03—Common misconceptions
Where investors most often get this wrong.
If RSI is above 70, the price must fall soon.
An overbought reading can persist in a strong uptrend. RSI signals stretched momentum, not a guaranteed reversal or a timing tool on its own.
RSI below 30 means the share is cheap or undervalued.
RSI measures recent price momentum, not business value. A share can be “oversold” on RSI and still be fundamentally expensive, or fall further.
RSI works the same on every share.
Behaviour differs by volatility and liquidity. Thinly traded shares can show jumpy RSI readings, so context and timeframe matter.
04—Using rsi on BSL
Where this term shows up across the platform — with live data.
- Check momentum readings on PSX names using the Stock Screener.
- Compare broader market momentum via the KSE-100 index page.
- Review a share’s chart and indicators from the Stocks section.
- Learn related concepts in our Technical Analysis glossary.
05—Frequently asked questions
What investors ask about rsi on the PSX.
Frequently Asked Questions
RSI (Relative Strength Index) is a technical indicator that scores momentum from 0 to 100 based on recent price changes. On PSX charts, values above 70 are often treated as overbought and below 30 as oversold, indicating potentially stretched moves rather than certainty.
No. RSI above 70 is commonly interpreted as overbought, but prices can keep rising and RSI can stay high during strong trends. Many traders use RSI as a warning sign to manage risk and look for confirmation from trend or support/resistance levels.
A widely used default is a 14-session RSI, and many charting tools use that setting by default. Shorter periods tend to be more sensitive and produce more signals, while longer periods are smoother and may react more slowly.
Yes. RSI is calculated from price changes, so it can be applied to any price series, including PSX indices such as the KSE-100, KSE-30, and Shariah indices like the KMI-30, depending on what your charting tool provides.
It can affect short-term behaviour because daily limits restrict how far many shares can move from the previous close in a single session. That can shape the pattern of day-to-day price changes that RSI uses. RSI still reflects past price action and should be read with liquidity and trend context.
06—Related terms
Keep building the picture.
A method of evaluating securities by analysing historical price and volume data, using charts and indicators to forecast future price movements. Focuses on market behaviour rather than underlying business fundamentals.
A technical analysis tool that smooths out price data by calculating the average price of a security over a defined period. Commonly used to identify trends and potential entry or exit points.
In technical analysis, a price level where buying interest has historically been strong enough to prevent further decline. A break below support is often seen as a bearish signal.
In technical analysis, a price level where selling pressure has historically been strong enough to prevent further upward movement. A breakout above resistance is often seen as a bullish signal.
The general direction of a market or security's price movement over a period of time. Markets trend upward (bullish), downward (bearish), or sideways (consolidation).
The total number of shares traded in a security over a given period. Volume is a key indicator of market activity and the strength behind price movements.
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