CryptoVN - Relative Momentum Index (RMI)
The Relative Momentum Index (RMI) was developed by Roger Altman and was introduced in his article in the February, 1993 issue of Technical Analysis of Stocks & Commodities magazine.
RMI function determines the internal momentum of a field using the number of upward and downward price changes across a given number of bars over a given period of time.
As an oscillator, the RMI exhibits the same strengths and weaknesses of other overbought / oversold indicators. During strong trending markets the RMI will remain at overbought or oversold levels for an extended period. However, during non-trending markets, the RMI tends to oscillate predictably between an overbought level of 70 to 90 and an oversold level of 10 to 30.
Since the RMI is based on the RSI, many of the same interpretation methods can be applied. In fact, many of these “situations” are more clearly manifest with the RMI than they are with the RSI.
* Tops and Bottoms: The RMI usually tops above 70 and bottoms below 30. The RMI usually forms these tops and bottoms before the underlying price chart.
* Chart Formations: The RMI often forms chart patterns (such as head and shoulders or rising wedges) that may or may not be visible on the price chart.
* Failure Swings: (Also known as support or resistance penetrations or breakouts.) This is where the RMI surpasses a previous high (peak) or falls below a recent low (trough).
* Support and Resistance: The RMI shows, sometimes more clearly than the price chart, levels of support and resistance.
* Divergence: As discussed above, this occurs when the price makes a new high (or low) that is not confirmed by a new RMI high (or low).
The main purpose of RMI is to improve the data provided by the RSI classical indicator if the price touches the Oversold or Overbought zone.
If you like and use this, tips and donations are always welcome ^^!!
(*) My Advice to You:
- The Trend Is Your Friend. TRADE WHAT YOU SEE, NOT WHAT YOU THINK.
Happy Trading Life ^^!
RMI function determines the internal momentum of a field using the number of upward and downward price changes across a given number of bars over a given period of time.
As an oscillator, the RMI exhibits the same strengths and weaknesses of other overbought / oversold indicators. During strong trending markets the RMI will remain at overbought or oversold levels for an extended period. However, during non-trending markets, the RMI tends to oscillate predictably between an overbought level of 70 to 90 and an oversold level of 10 to 30.
Since the RMI is based on the RSI, many of the same interpretation methods can be applied. In fact, many of these “situations” are more clearly manifest with the RMI than they are with the RSI.
* Tops and Bottoms: The RMI usually tops above 70 and bottoms below 30. The RMI usually forms these tops and bottoms before the underlying price chart.
* Chart Formations: The RMI often forms chart patterns (such as head and shoulders or rising wedges) that may or may not be visible on the price chart.
* Failure Swings: (Also known as support or resistance penetrations or breakouts.) This is where the RMI surpasses a previous high (peak) or falls below a recent low (trough).
* Support and Resistance: The RMI shows, sometimes more clearly than the price chart, levels of support and resistance.
* Divergence: As discussed above, this occurs when the price makes a new high (or low) that is not confirmed by a new RMI high (or low).
The main purpose of RMI is to improve the data provided by the RSI classical indicator if the price touches the Oversold or Overbought zone.
If you like and use this, tips and donations are always welcome ^^!!
- Bitcoin: 3BMEXfdqNNmVmtHYvZ1HqMyXchAGLUrbqF
(*) My Advice to You:
- The Trend Is Your Friend. TRADE WHAT YOU SEE, NOT WHAT YOU THINK.
Happy Trading Life ^^!
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