RSI is the abbreviation of the "Relative Strength Index", a financial technical analysis oscillator showing price strength by comparing upward and downward close-to-close movements, one of the most popular Technical Indicators in oscillator charting methods. The RSI is popular because it is relatively easy to interpret.

RSI is normally used to compare the currency strength and to predict currency price movements.
This indicator was introduced by Welles Wilder in June 1978. Mr. Wilder's book, "New Concepts in Technical Trading Systems", also provided step-by-step instructions on counting and explaining the RSI.

The formula to calculate the RSI is as follows:

RSI = 100 - ( 100 / ( 1 + RS ) )
RS = Average of inclining prices for X days / average of declining prices for X days

You can change the number of days to fit your needs. Initially, Mr. Wilder mainly used 14 days for RS calculation, and he sometimes used 9days in other cases. The RSI based on the shorter term is more sensitive to the forex market than the longer one. You had better choose the most suitable type for your own forex trading.

RSI helps traders to predict price movements and to identify market turning points. Rising in RSI will normally followed by a rise in currency price. Vice-versa, downtrend RSI indicates that the currency price is more likely dropping.