The RSI is best described as an indicator which represents the momentum in a particular Stock or Index when it is reaching extreme levels to the upside (referred to as overbought) or downside (referred to as oversold) and is therefore due for a reversal. RSI Bands are placed at 70 which is considered an extreme level to the upside, and 30 which is considered an extreme level to the downside.
RSI = 100-(100/(1+U/D))
U — is the average number of positive price changes;
D — is the average number of negative price changes.