RSI

Relative Strength Index or RSI is a technical analysis indicator that determines the magnitude of gains against the magnitude of losses over a certain period of time. RSI is widely used to determine whether a market is overbought or oversold. The calculation involves doing analysis of the bullish ranges against the bearish ranges for a certain period of time which is usually 14 days.
The calculation of RSI is done in the following way:

RSI = 100 - (100 / 1 + RS)

At first, you need to add all the bullish trades (when the prices go up) and then it has to be divided by the sum of the bearish days when the price slides down. Now the calculation can be turn into an index with the range of 0 to 100. It is to be mentioned that usually the RSI will refer to a bullish signal when it crosses the 30 line from beneath while on the other hand it will signify a bearish signal if crosses the 70 line from above.
In order to simplify the explanation of the calculation, RSI has been broken down to the basic components including: Average gain, average loss and RS.
The calculation that we have taken under consideration is based on 14 periods where the initial calculation for average gain and average loss are the simple 14 period averages.
The formula is:

First Average Gain = Sum of the Gains over the past 14 periods / 14

First Average Loss = Sum of the Losses over the past 14 periods / 14

Then for the following calculations, prior average and the present gain loss is taken under consideration:

Average Gain = [(Previous Average Gain) * 13 + current gain] / 14

Average Gain = [(Previous Average Loss) * 13 + current loss] / 14

Although the default look-back period for RSI is 14, but you may consider lowering it in order to improve the sensitivity or raising it to reduce sensitivity. It is more likely for the 10-day RSI to hit the overbought or oversold level in comparison with the 20- day RSI.