Relative-spread-strength for cycle confirmation

A scored average spread as a cycle-proxy

Relative-spread-strength is built by subtracting a longer moving average from a shorter one, passing that spread through a relative-strength-index, and then smoothing the oscillator. The moving-average pair is the raw series. The relative-strength-index is a bounded 0-100 transform of that spread, so expansion and contraction can be compared across markets and sampling intervals.

The construction is intended as a cycle-proxy. It scores how strongly the average spread expands in one direction and then contracts as the averages reconverge, with the aim of marking candidate cycle highs and lows rather than issuing an entry by itself.

Bounds mark candidates, not entries

Candidate extremes are associated with oscillator readings above 70 or below 30. Those readings are described as more useful on longer sampling intervals such as weekly bars.

Crossing those oscillator bounds is treated only as a potential reversal condition, not as a standalone entry. A lower interval is then inspected for a later signal.

A later price-indicator mismatch

Divergence, in this stack, is a later mismatch between price extremes and oscillator extremes. It is used only after the spread oscillator has already marked an extended zone. A price-indicator mismatch can appear at a cycle extreme and is described as strengthening the candidate turn. Using that mismatch as the only condition is treated as incomplete.

A potentially bullish mismatch is marked when price makes a lower low while the oscillator makes a higher low. A potentially bearish mismatch is marked when price makes a higher high while the oscillator makes a lower high.

A mismatch is treated as confirmed only after a later pivot forms, several bars after the extreme points.

Parameters and a two-interval check

Recurring parameter choices in the reconstructions are 10- and 40-period averages for the spread and a 5-period relative-strength-index, often smoothed over 5 periods.

A multi-interval workflow places the combination on a weekly chart for direction and a rapid-relative-strength-index on a daily chart. After the weekly reading is extended, the lower interval is inspected for a daily mismatch, a trendline break, or a reversal pattern.

Editorial reading of the stack

Editorial interpretation, not an archive claim: the three layers are sequential. Isolate expansion with the two-average spread, score that spread so extremes are comparable, and only then look for a price-indicator mismatch. Skipping the first two layers leaves the third incomplete.