RSI = 100 / (1 + DP/ UP)
UP is a moving average of increasing price within selected period of time
DP is a moving average of decreasing price within selected period of time
The use of Relative Strength Index RSI is also similar to stochastics. Whenever you see the indicator going lower then 20, that hints for oversold. Whenever you see the indicator going higher then 80, that hints for overbought.
Relative Strength Index is one of the popular trading tools. It can help you tremendously to spot trend formation. The possible uptrend could be confirmed with RSI being above 50 mark and the possible downtrend could be confirmed with RSI being below 50 mark.