How to Calculate RSI Indicator in Excel
In this Excel tutorial you will learn how to Calculate RSI Indicator in Excel spreadsheet.
The Relative Strength Index (RSI) is a popular momentum indicator in technical analysis that helps determine whether a stock is overbought or oversold. It ranges from 0 to 100, with values above 70 indicating an overbought condition and values below 30 suggesting an oversold state. You can calculate the RSI indicator in an Excel spreadsheet by following these steps.
Step 1: Prepare Your Data
Make sure your data is well-organized, with Closing Prices for each trading day listed in one column. For example, you could have your dates in Column A and closing prices in Column B.
Step 2: Calculate Daily Changes (Gains and Losses)
In a new column (e.g., Column C labeled “Change”), calculate the difference between each day’s closing price and the previous day’s closing price =B2 – B1
Step 3: Calculate Average Gain and Average Loss
The standard RSI period is 14, so you need to calculate the average gain and average loss over the last 14 periods.
In a new column (e.g., Column D labeled “Gain”), enter the formula to record gains only: =IF(C2>0, C2, 0)
In another column (e.g., Column E labeled “Loss”), enter the formula for losses as positive values: =IF(C2<0, ABS(C2), 0)
Calculate Average Gain and Average Loss for the Initial Period:
- In Cell D15, calculate the Average Gain for the first 14 periods: =AVERAGE(D2:D15)
- In Cell E15, calculate the Average Loss for the first 14 periods: =AVERAGE(E2:E15)
Continued Averages (Smoothing)
To smooth the averages for gains and losses over time, use the following formulas from Row 16 onwards:
- Average Gain: =((D16 * 13) + D15) / 14
- Average Loss: =((E16 * 13) + E15) / 14
This ensures that the averages are smoothed over time, giving more weight to recent periods.
Step 4: Calculate Relative Strength (RS)
The Relative Strength (RS) is the ratio of the average gain to the average loss.
In a new column (e.g., Column F labeled “RS”): =IF(E16=0, 0, D16/E16)
This formula calculates the ratio of average gain to average loss. If the average loss is `0`, set the RS to `0` to avoid division by zero.
Step 5: Calculate RSI
The RSI is derived from the relative strength using the formula: =100 – (100 / (1 + F16))
Place this formula in a new column (e.g., Column G labeled “RSI”) and drag it down to calculate the RSI for all periods.
Step 6: Plot the RSI
To visualize the RSI, you can create a line chart:
- Highlight the column containing the RSI values (Column G) and the corresponding dates (Column A).
- Go to the Insert tab and choose Line Chart.
- Customize the chart as needed, setting the dates as the x-axis and RSI values as the y-axis.
Step 7: Interpret the Results
Now that you have plotted the RSI:
An RSI above 70 indicates an overbought condition, suggesting the stock may be due for a correction or reversal. An RSI below 30 indicates an oversold condition, suggesting the stock might be undervalued or due for a bounce.
You can calculate and plot the RSI in Excel to help analyze stock trends and potential buy/sell opportunities. Adjust the period (14) as needed to fit your analysis.
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