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2010issue C0956-63

A consensus filter for objective RSI and smoothing construction

This archive article teaches a construction that binds a Relative Strength Index forecast and an exponential-smoothing forecast to one consensus filter, so only candidate setups that match shared pattern-quality rules are retained.

  • Relative Strength Index is treated as a formula-driven forecast on ordered price observations, not as visual pattern identification.
  • Exponential smoothing is a mathematical indicator construction that can be scanned systematically across series.
  • A consensus filter first casts a wide net of candidates, then keeps only setups that match shared expert-rule elements such as symmetry, volume, and spacing.
  • Chart-pattern rules remain subjective even after automation, so they are combined with formula-based indicators rather than used as standalone signals.
Entries in this reading2 entries
Current trackExponential smoothing183 readingsRelative Strength Index261 readings

Formula-driven forecasts, not isolated chart shapes

The featured construction treats Relative Strength Index as a formula-driven forecast on ordered price observations. That treatment is distinct from visual pattern identification. In this workflow, Relative Strength Index is a bounded momentum forecast built from ordered price observations over a defined lookback.

Exponential smoothing is included as a mathematical indicator construction that can be scanned systematically across series. It is a recursive forecast that weights recent observations more heavily than older ones.

ABT daily price, November 2009 to 2 July 2010

A trader sees Abbott climb from the low 53s into a late-January high near 56 dollars, then grind lower into the May 2010 air-pocket that tags about 46 and a June bounce that fails near 50.5 before the printed 2 July close at 46.46. The path was read off the daily-bar pane of the AmiBroker 5.30 main-screen figure in the product review; the last session is taken from the quote line printed on that figure, and the bars in between are digitized from the same raster.
A trader sees Abbott climb from the low 53s into a late-January high near 56 dollars, then grind lower into the May 2010 air-pocket that tags about 46 and a June bounce that fails near 50.5 before the printed 2 July close at 46.46. The path was read off the daily-bar pane of the AmiBroker 5.30 main-screen figure in the product review; the last session is taken from the quote line printed on that figure, and the bars in between are digitized from the same raster.ABT · Daily · 2009-11-02T00:00:00.000Z to 2010-07-02T00:00:00.000Z

Eight months of daily bars sit in a small pane, so intermediate prices are only good to about half a dollar. Last-bar overlay prints at 50.71 and 47.58, and the lower-pane 38.05 reading the review ties to MA(RSI(15),15), are single-session annotations and were not traced as series.

Build the consensus filter from shared expert rules

A consensus filter is a construction step that retains only candidate setups matching shared expert-rule commonality. The filter first casts a wide net of candidate setups, then keeps only those matching shared expert-rule elements such as symmetry, volume, and spacing.

Different identification rules can label different patterns in the same price region, so an explicit rule set is required for repeatable construction. The construction pairs both formula-based forecasts with that shared rule set rather than treating isolated chart shapes as standalone signals.

Judge the later forecast on a defined breakout horizon

A breakout horizon is the sampling interval after a setup forms during which a later forecast is evaluated. A historical-database study concluded that setups can have trading value, with a higher chance of reaching targets if evaluation waits longer than the formation period. The study described waiting as long as three times the formation length before judging whether a setup reached its target.

Identifying a candidate before the breakout is presented as a way to enter earlier than the later price jump.

Editorial reading of the construction

Editorial interpretation, not an archive claim: the construction is more objective when both forecasts pass through the same consensus filter, because chart-pattern rules remain subjective even after automation. The archive describes the historical workflow. This reading does not add a performance claim.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
34 of 41 in the Exponential smoothing track
201212-17 pp.Next on Exponential smoothingSentiment-zone oscillator from signed closesEach bar is coded plus one after a higher close and minus one otherwise, so the input series encodes only the direction of consecutive closes.
All readings on this track · 41 readings
  1. 1984Matching average age across price filters
  2. 1984Residual-impact construction of exponential smoothers
  3. 1988Constructing simple and exponential moving averages as specified filters
  4. 1989Evaluating smoothed free reserves and funds-discount spreads
  5. 1990Integer construction of moving averages and exponential smoothing
  6. 1990Constructing incremental moving average filters
  7. 1991Constructing a double-smoothed stochastic oscillator
  8. 1991Constructing an exponential average from a smoothing weight
  9. 1991Constructing a double-smoothed momentum oscillator family
  10. 1991Competing certainty rules from exponential-average conditions
  11. 1991Hybrid construction of a mechanical timing system from smoothed signals
  12. 1991Constructing an exponential smoother from a moving-average length
  13. 1991Equivalent relative-strength-index constructions from a ratio and from smoothed momentum
  14. 1991Constructing the true strength index from double-smoothed momentum
  15. 1991True strength index from signed, double-smoothed momentum
  16. 1992Constructing exponential averages from simple lookbacks
  17. 1992Constructing exponential averages by the smoothing constant, startup length and lag
  18. 1992Nested range smoothing and windowed high-low damping
  19. 1992A weekly equity stance from the discount-bill spread
  20. 1993Double-smoothed stochastics momentum index construction
  21. 1993Constructing the true strength index with double exponential smoothing
  22. 1994Polarized fractal efficiency with a shared exponential smoother
  23. 1994Five-interval exponential smoothing of ten-interval signed path-efficiency
  24. 1994Hand-ranked price-volume series with stacked smoothing and stochastic
  25. 1995Range expansion filter on multi-horizon averages
  26. 1995The exponential smoothing constant from averaging lag
  27. 1997Construct a nested-average rainbow band and oscillator
  28. 1998Filter stacks that combine a moving average with exponential smoothing
  29. 2002Smoothed relative-strength construction from wilder-averaging and a price prefilter
  30. 2003Reverse-engineered RSI price targets
  31. 2004Piecewise trend quality from moving-average reversals
  32. 2004Nested smoothing recipes versus unaudited oscillator experiments
  33. 2008Weight construction beyond the N-day label
  34. 2010A consensus filter for objective RSI and smoothing construction
  35. 2012Sentiment-zone oscillator from signed closes
  36. 2012Classic RSI one-over-N smoothing versus the standard exponential average
  37. 2013Why exponential smoothing uses two over n plus one
  38. 2015Constructing ratio indicators with moving-average and exponential-smoothing weights
  39. 2015Slow relative-strength index from an exponentially smoothed price
  40. 2017Rebuilding the relative strength index as open-scale buy-sell pressure
  41. 2017Comparing Wilder and exponential smoothing inside a relative-strength index
By fieldIndicators and filters874 readingsBy year2010169 readings
All 183 readings tagged Exponential smoothing
Also on Exponential smoothing5 readings
1991Constructing a double-smoothed momentum oscillator family1991Equivalent relative-strength-index constructions from a ratio and from smoothed momentum1991True strength index from signed, double-smoothed momentum1992Constructing true strength from double-smoothed momentum1995Explicit exponential weights and binary entry filters