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2011issue C0164-71

Two-horizon weekly RSI with moving averages and stops

A slower weekly relative-strength-index, a faster weekly relative-strength-index, a pair of simple moving averages, and two stop treatments can sit on one weekly chart so longer-horizon trend exposure and shorter correction trades share the same transparent rule set.

  • Two weekly relative-strength-index readings of different lengths let longer-horizon positions and shorter retracement trades share one chart.
  • The longer reading supplies trend direction as an entry filter, and both readings take part in entry and exit conditions.
  • A slower and a faster simple moving average of the close sit on the price pane as context for the two oscillator subgraphs.
  • Implementations add a percent-stop with a simple size rule or overlay two-stop-level signals so risk stays bounded once a trade is open.
Entries in this reading3 entries
Current trackRelative Strength Index261 readingsStop-loss order297 readingsMoving average597 readings

Two weekly oscillators on one chart

The featured rule set is built around two weekly relative-strength-index calculations of different lengths so longer-horizon positions and shorter retracement trades can be handled on one chart.

A relative-strength-index is a bounded oscillator of recent gains versus losses over a chosen lookback. Here a slower weekly reading filters direction and a faster weekly reading times retracement entries and exits.

A five-bar weekly relative-strength-index and a 17-bar weekly relative-strength-index are used together. The longer reading supplies trend direction as an entry filter, and both readings participate in entry and exit conditions.

Google weekly 5-bar and 17-bar RSI

The slower 17-week RSI stays under 60 through the 2008 selloff and only crosses 60 in spring 2009, while the faster 5-week RSI tags oversold near 20 twice, spikes above 60 in early 2009, then holds an elevated range once the slower line confirms the uptrend. Points were read from the TradeStation weekly Google oscillator panes, not from a table.
The slower 17-week RSI stays under 60 through the 2008 selloff and only crosses 60 in spring 2009, while the faster 5-week RSI tags oversold near 20 twice, spikes above 60 in early 2009, then holds an elevated range once the slower line confirms the uptrend. Points were read from the TradeStation weekly Google oscillator panes, not from a table.GOOG · weekly · 2008-07-18T00:00:00.000Z to 2009-07-10T00:00:00.000Z

Scrolled weekly window is about July 2008 to July 2009. Status-line prints 92.74 and 68.66 belong to the later live bar, not this view. Guides on the source panes are 40 and 60; price pane also shows 10-week and 40-week simple moving averages. RSI readings are approximate to a few points.

What the design was asked to do

The design requirements call for a single transparent model on weekly data, limited chart-pattern discretion, the ability to stay long in an uptrend while also trading corrections in a downtrend, and a simple implementation.

Moving averages as chart context

A moving average is a smoothed average of closing prices over a stated bar count. A slower and a faster weekly average sit on the same price chart as context for the two-horizon oscillator rules.

A weekly price chart implementation plots a 40-bar simple moving average of the close and a 10-bar simple moving average of the close on the same pane as the two relative-strength-index subgraphs.

Parameters and three ways to mark the rules

A configurable study exposes parameters for the slow and quick relative-strength-index lengths, the slow and quick moving-average lengths, and separate buy and sell levels for each oscillator.

A spreadsheet implementation performs the same oscillator and moving-average calculations in formulas and marks buy and sell points on a candlestick chart that also shows the moving averages.

Another implementation overlays two-stop-level signals from the two-oscillator rule set as green or red dots on the price chart.

How stops sit beside the oscillators

A stop-loss is a pre-set exit that caps loss or exposure once a trade is open. Implementations in this material add a second stop layer or a percent-stop with a simple size rule so risk stays bounded before and during the position.

At least one platform implementation adds a percent-stop system plus a simple position-size rule based on capital, closed equity, and close price.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
20 of 26 in the Relative Strength Index track
20118-9 pp.Next on Relative Strength IndexPercent-offset simple moving average bands with relative-strength confirmationA percent-offset-envelope multiplies one simple moving average by constants such as 1.02 and 0.98 and does not change how many closes enter the mean.
All readings on this track · 26 readings
  1. 1991Constructing the relative strength index from seed and recursive averages
  2. 1991Inverting relative-strength-index closes for same-session rules
  3. 1991Seeded averages and the recursive-update
  4. 1993Restating relative-strength-index parameters after a smoothing change
  5. 1993Relative momentum construction by stretching the relative strength lookback
  6. 1994Constructing relative strength index lookbacks, bands, and confirmation filters
  7. 1994Building the relative-strength-index from signed close changes
  8. 1997Constructing the relative strength index as a bounded up-down close oscillator
  9. 2002Four-line oscillator construction for rule-based entries
  10. 2004Assembling a bounded RSI path
  11. 2004Constructing RSI on highs, lows, and reverse targets
  12. 2004Reverse-engineered RSI as an explicit next-bar price target
  13. 2006Self-adjusting RSI thresholds from the oscillator's own spread
  14. 2006Constructing adaptive overbought and oversold levels for a relative strength index
  15. 2006Relative Strength Index 50-line entry beyond the 70 and 30 extremes
  16. 2007Lock a followable rule set before testing RSI exits
  17. 2008RSI bands as a one-day shift of reverse-engineered levels
  18. 2008Constructing an asymmetrical RSI from adaptive up and down averages
  19. 2010Building a bounded oscillator from a rainbow smoother, relative strength, and inverse Fisher
  20. 2011Two-horizon weekly RSI with moving averages and stops
  21. 2011Percent-offset simple moving average bands with relative-strength confirmation
  22. 2011Fast and slow relative strength index as one mechanical rule book
  23. 2011Price-zone oscillator construction from signed closes
  24. 2015Constructing a zero-lag oscillator against a relative strength index baseline
  25. 2015Relative Strength Index as a baseline in 2015 software listings
  26. 2018Building a Fisherized deviation-scaled oscillator
By fieldIndicators and filters874 readingsBy year2011131 readings
All 261 readings tagged Relative Strength Index
Also on Relative Strength Index5 readings
1988Staged Average Directional Index construction with Relative Strength Index confirmation and stop alerts2000Rank rotation, a stop-loss order, and Relative Strength Index in fund switching2002Combining Bollinger Bands, RSI, and a stop-loss2002Four-line oscillator construction for rule-based entries2004Decompose high, low, and close into separate forecast streams