Kev,
You are on the right track but the scaling on the RSI is not always constant.
Walter Baeyans in his book titled RSI...Logic, Signals & Time Frame
Correlation discusses this. Basically the RSI does not always move in a
directly proportional manner. Page 22 of his book explains this. There is only
one neutral point which is 50.
Preston
--- In equismetastock@xxxxxxxxxxxxxxx,
"formulaprimer" <formulaprimer@xxx> wrote:
>
> The way the RSI is calculated leads to the rethinking of the indicator
itself that what the original designer intended it for.
> It is a momentum indicator but actually with the way it is constructed it
is a TREND Indicator like ADX... Here is why
>
> RSI = 100 - [100/(1+(U/D))]
>
> Where:
>
> U = An average of upward price change.
> D = An average of downward price change.
>
> This means that 66.67 horizontal line and 33.33 horizontal lines are
percentage indicators... If in a bull market 66.67 should be touched at least
once and in a down bear trend 33.33 should be touched at least once. This is
the reason why the default setting of 14 days is statistically relevant by the
creator Wilder. Too sum it up in a bull market once the 66.67 level has been
touched by the RSI it is statically a bull market until the 33.33 level is
touched to signal a bear market... See if this analysis is correct?
>