Relative Strength Index (RSI) - Wilder's

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Relative Strength Index (RSI) - Wilder's

Variable List Abbreviation: WilderRSI

 

Variable Mode(s): Standard, Stock, Futures1, and Futures2

[ Note: uses selected close variable in Stock, Futures1, and Futures2 modes ]

 

Parameter(s): WilderRSI time periods

 

Description:

Indicates the relative dominance of uptrends to downtrends over n (time periods) time periods.  Useful for detecting overbought and oversold market conditions, which in turn indicate the possibility of a reactionary trend reversal.  An RSI near 100 indicates a dominance of an uptrend (possible overbought conditions), while an RSI near 0 indicates the dominance of a downtrend (possible oversold conditions).

 

Calculation:

WilderRSI = 100 - ( 100 / (1 + RS))

 

RS = Up / Down                                (equals zero if down=0)

 

Initially

Up   = Sum of increases over last n time periods divided by n

Down = Sum of decreases over last n time periods divided by n

 

Remainder of time

Up   = [ Previous Up   * (n-1) + increase   ] / n

Down = [ Previous Down * (n-1) + decrease ] / n

 

Notes:  Usually for n-time period RSI, n chosen to be a half cycle length.  Values range from 0 (low relative strength) to 100 (high relative strength)