RSI=100  - ( 100 / (1+RS)

where RS = Average of "x" days up closes divided by the average of "x" days down closes.

The RSI can be considered a "smoothed" oscillator.

One of the advantages of oscillator analysis is to point out short term market extremes. Therefore the constant 0-100 RSI scale is very useful in order to compare different situations and gives the possibility to identify the "danger zones" corresponding to overbought and oversold situations (75/25 - 70-30).  For example, an RSI value above 75 indicates an overbought situation, whilst a value under 25 indicates an oversold situation.   Although the classic values are 75/25, sometimes the values of 80/20 seem to be more appropriate in strong trending markets.

The oscillators first move in the overbought area (oversold for a downtrend) should only be considered as a warning; as any strong trend produces extreme values for the RSI and in strong markets, the oscillator line can remain in the extreme zones for some time.