The correct answer is C . The Relative Strength Index (RSI) is a technical-analysis momentum oscillator designed to measure the speed and magnitude of recent price movements. It normally ranges from 0 to 100 . Traditional interpretation treats readings above approximately 70 as potentially overbought and readings below approximately 30 as potentially oversold. These extremes may alert analysts to the possibility that recent price momentum has become stretched and that a consolidation or reversal could occur.
RSI should not be interpreted as a guaranteed buy-or-sell signal. A strongly trending security can remain overbought or oversold for a prolonged period. Analysts therefore commonly combine RSI with trend direction, support and resistance, trading volume, moving averages or other technical evidence before drawing conclusions.
The CIRE syllabus requires candidates to understand technical and statistical approaches to stock-market behaviour , distinguishing them from fundamental analysis. RSI belongs to technical analysis because it is calculated from market-price behaviour rather than corporate accounting data.
A and D describe fundamental analysis , which uses earnings, financial ratios and company fundamentals. B is incorrect because RSI measures momentum based on relative recent gains and losses; it is not principally a high-low volatility measure.
Study Guide Reference: CIRE Element 5.8 — technical/statistical analysis of stock-market behaviour; momentum indicators including RSI.
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