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Investment advice and corporate finance
Module 12Investment Management and Corporate FinanceA share's 14-day average gain is RM0.12 and its average loss RM0.18. Which reading of its RSI is correct?
RS = 0.12 ÷ 0.18 = 0.667, so RSI = 100 − 100 ÷ 1.667 = 40.0. Under the usual 70/30 thresholds, 40 sits between them: neither overbought (above 70) nor oversold (below 30). 66.7 is RS multiplied by 100, not the RSI. Calling 40 oversold misplaces the 30 line. 60.0 inverts the formula (it is 100 minus the correct reading) and draws the wrong conclusion from it. Source: SIDC Module 7 Study Outline (Jul-Dec 2026) Topic 6 Technical Analysis, 6.6 Indicators; J. W. Wilder, New Concepts in Technical Trading Systems (1978); J. J. Murphy, Technical Analysis of the Financial Markets (NYIF, 1999), ch. on oscillators (as at October 2026).
Treating any reading below 50 as oversold. Oversold conventionally means below 30.
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