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Compresses the gain-versus-loss ratio into 7 periods instead of 14, exposing short-term momentum shifts with faster response but more noise.
RSI 7 is a 7-period Relative Strength Index. It is more sensitive than the standard 14-period RSI and responds faster to recent price changes.
The 7-day Relative Strength Index (RSI-7) is a faster version of the standard RSI that measures momentum over just seven trading periods. This shorter lookback makes RSI-7 more sensitive to recent price changes, generating more frequent overbought and oversold signals. It's preferred by short-term traders who want quicker responsiveness to momentum shifts.
The RSI calculation:
RS = Average Gain (7 periods) / Average Loss (7 periods) RSI-7 = 100 - (100 / (1 + RS))
RSI-7 vs. RSI-14:
- More sensitive: Reaches extremes more frequently
- Faster signals: Responds quickly to price changes
- More volatile: Greater swings in the indicator
- More signals: Generates more overbought/oversold readings
Interpreting RSI-7 levels:
- RSI-7 > 80: Strongly overbought; consider taking profits
- RSI-7 70-80: Overbought; momentum very strong
- RSI-7 50-70: Bullish momentum
- RSI-7 30-50: Bearish momentum
- RSI-7 20-30: Oversold; weakness extreme
- RSI-7 < 20: Strongly oversold; watch for bounce
Trading applications:
- Short-term reversals: Trade extreme readings for mean reversion
- Momentum confirmation: Verify price moves with RSI-7 direction
- Quick divergences: Spot divergences faster than RSI-14
- Day trading: Suitable for intraday momentum analysis
Adjusted thresholds for RSI-7:
- In strong uptrends: Use 80/40 instead of 70/30
- In strong downtrends: Use 60/20 instead of 70/30
- Range-bound markets: Traditional 70/30 works better
Limitations:
- More whipsaws: Sensitive nature generates false signals
- Too fast for investors: Not suitable for long-term positioning
- Noise capture: May react to insignificant price moves
- Frequent extremes: Can stay overbought/oversold longer in trends
RSI-7 is designed for active traders who need quick responsiveness. The trade-off for faster signals is more noise and false signals. Use RSI-7 when short-term timing is priority; use RSI-14 for more reliable but slower signals.