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2004issue C041

RSI and momentum agreement as an asymmetric filter

A 14-day relative strength index and a 14-day momentum reading can be paired so both must agree before entry, while any one listed contrary reading is enough to exit. Editorial framing treats that imbalance as the design of the combination.

  • Agreement-entry opens a side only when a 14-day relative strength index and a 14-day momentum reading confirm together.
  • Exit is not a mirror of entry: a long or short is closed if any one listed invalidation appears.
  • Momentum-difference subtracts the close n periods earlier from the latest close, commonly over 14 days, and sits at zero when those closes are equal.
  • A stated caution is to wait for later prices to confirm an oscillator signal before acting on it.
Entries in this reading3 entries
Current trackRate of Change50 readingsMACD115 readingsRelative Strength Index186 readings

A bounded oscillator paired with a speed reading

The archive pairs a 14-day relative strength index with a 14-day momentum reading. Relative strength index is a bounded oscillator, commonly sampled over a 14-day lookback, and is read against a midpoint near 50 and extremes near 70 and 30. Momentum is treated as the velocity of price change.

Momentum as a difference around zero

Momentum-difference is formed by subtracting the close n periods earlier from the latest close, with n commonly set to 14 days. If the current close equals the lagged close, the difference reading is zero. A lower current close is negative and a higher current close is positive.

The archive describes this construction as similar to a price rate-of-change measure, except momentum is expressed as a ratio rather than a percentage. Rate of change is the related price-speed construction framed as a percentage, while momentum is framed as a ratio of change.

14-day momentum, March 2003–March 2004

The MetaStock momentum pane stays mostly above its 100 centerline while daily bars grind from the low 800s toward 1150. Under the article’s zero-line rule that stance is a long bias for most of the advance. Values were read off Figure 1; the article prints no numeric table.
The MetaStock momentum pane stays mostly above its 100 centerline while daily bars grind from the low 800s toward 1150. Under the article’s zero-line rule that stance is a long bias for most of the advance. Values were read off Figure 1; the article prints no numeric table.Daily · 2003-03-01T00:00:00.000Z to 2004-03-31T00:00:00.000Z

The article defines momentum as a 14-day close-to-close difference centered on zero. The printed MetaStock figure uses the ratio form (current close divided by the close 14 days earlier, times 100), so the same rule is the 100 line. Y readings are approximate to about one index point.

MACD as the trend-following analogue

Used as a trend-following oscillator, momentum is compared with MACD. Bottoms are read as buy conditions, subsequent rises as sell conditions, and extreme readings as trend continuation. MACD is the analogue for those three readings.

Used as a leading indicator, market peaks and troughs are assumed to show rapidly rising or falling prices, and the oscillator is expected to diverge sharply at those turns.

Agreement-entry and the listed exits

A 14-day relative strength index can be paired with a 14-day momentum reading so that both must agree before entry, while only one contrary signal is required to exit. Agreement-entry is that pairing rule: it opens exposure only when both confirm together, then exits when any one listed invalidation appears.

A long combination is specified as relative strength index moving above 50 while remaining below 70, together with momentum moving above zero. A long is closed if relative strength index falls below 50, relative strength index rises above 70, or momentum falls below zero.

A short combination is specified as relative strength index moving below 50 while remaining above 30, together with momentum moving below zero. The short is closed if relative strength index rises above 50, relative strength index falls to 30 or lower, or momentum rises above zero.

Price confirmation after an oscillator signal

A stated caution is to wait for later prices to confirm an oscillator signal before acting on it.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
41 of 46 in the Rate of Change track
20051-4 pp.Next on Rate of ChangeConstructing price-normalized moving-slope hybridsA rate-of-change series is lookback change divided by price, which removes the level bias that appears when two differently priced indexes are compared on raw change.
All readings on this track · 46 readings
  1. 1985Constructing excess and momentum difference-curve oscillators
  2. 1988Five reading rules for smoothed indicator charts
  3. 1989Momentum overlays that speed moving-average oscillators
  4. 1990A laboratory template that constructs Rate of Change as a pane module
  5. 1991Volume-scaled rate of change as a momentum construction
  6. 1991Three-indicator market overview from tape, sentiment and rates
  7. 1991Three-component trend model with rate-of-change filters
  8. 1992A KST oscillator from a weighted rate-of-change stack
  9. 1992Four-window weighted rate-of-change composite
  10. 1992Constructing multi-span smoothed rate-of-change filters
  11. 1992Constructing a four-horizon summed rate of change
  12. 1992Constructing KST from four weighted smoothed rates of change
  13. 1992Constructing a composite from weighted smoothed rates of change
  14. 1992Three-horizon KST maturity alignment
  15. 1992Construct a bond-led dividend-to-bond-yield regime first
  16. 1992Constructing relative-strength KST from weighted rate-of-change
  17. 1993Constructing a volume oscillator from average ratios and smoothed rate of change
  18. 1994Gold as a cycle clock for commodities and yields
  19. 1994Constructing a composite from weighted, smoothed rate-of-change windows
  20. 1994Constructing gold-mining rate-of-change tripwires for Treasury bonds
  21. 1994A capacity-stress checklist across commodities, bonds, and breadth
  22. 1994Rate of change parameters for testable entries
  23. 1994Constructing rate-of-change midpoints, lookbacks and divergence
  24. 1994Lead oscillator breaks need price trendline confirmation
  25. 1994Nested averages for an annual momentum curve
  26. 1994Evaluating a Coppock-style rate of change as a bottom-regime filter
  27. 1995A weighted eleven-month Dow rate of change as one testable timing procedure
  28. 1996Named lookbacks, thresholds, and streaks for entry rules
  29. 1997A midpoint rate-of-change test for bond trend follow-through
  30. 1997Constructing a short-rate-adjusted equity momentum filter
  31. 1998Daily momentum rank-churn as a portfolio-construction problem
  32. 1999Constructing a lagged rate of change cycle system
  33. 2000A triple delay line then a one-bar elliptic oscillator
  34. 2001Confirming rate of change divergences with price
  35. 2001Momentum trendline breaks need price confirmation
  36. 2001Market breadth, On-balance volume, and Rate of Change as a combined timing framework
  37. 2001Know Sure Thing with stacked horizons and trendline confirmation
  38. 2003Constructing a mechanical system from a rate of change condition
  39. 2003Constructing momentum from two closes and spotting divergence
  40. 2003Formula choice tilts which momentum mismatches count as divergences
  41. 2004RSI and momentum agreement as an asymmetric filter
  42. 2005Constructing price-normalized moving-slope hybrids
  43. 2005Unsigned speed gates on a fixed average-cross pair
  44. 2007Rebuilding rate of change as a path-weighted oscillator
  45. 2008Construct Special K so short-horizon signals stay inside the primary trend
  46. 2013Restore volume balance before adding another price-time indicator
By fieldIndicators and filters682 readingsBy year2004107 readings
All 50 readings tagged Rate of Change
Also on Rate of Change5 readings
1994A capacity-stress checklist across commodities, bonds, and breadth2003Constructing momentum from two closes and spotting divergence1985Constructing excess and momentum difference-curve oscillators1988Five reading rules for smoothed indicator charts1989Momentum overlays that speed moving-average oscillators