Relative Trend Index

Description:

The Relative Trend Index (RTI) is a technical analysis tool designed to measure the strength and direction of a trend. It combines elements of both momentum and trend-following indicators to provide a comprehensive view of the market's current trend status. The RTI oscillates around a central line, typically zero, indicating the strength and direction of the prevailing trend. Positive values suggest a bullish trend, while negative values indicate a bearish trend. The relative trend index is a more sophisticated method for identifying the trend when compared to something like relative strength index or RSI. This is due to the fact this indicator is designed to measure where the closing price is relative to the recent range, whereas RSI is focused on price changes. Adjusting the parameters allow traders to

Input Parameters:

Trend Length: Number of periods used in the calculation.
Signal Length: The number of periods used to calculate the Signal Line, determining the length of the look-back period for assessing trend strength.
OB: Customizable level that shows overbought conditions, aiding in spotting potential trend reversals.
OS: Customizable level that shows oversold conditions, aiding in spotting potential trend reversals.

Use Case:

Trend Identification: An RVI reading above 50 typically indicates buyers are taking control of new trends and pushing higher prices. In contrast, readings below 50 suggest sellers may be dominating market activity and driving prices lower. An upward-sloping curve indicates an uptrend – as closing prices consistently surpass opening prices – while a downward-sloping curve indicates a downtrend – as closing prices consistently fall short of opening prices.
Buying/Selling Pressure: When there is more buying pressure compared to selling pressure, the indicator will move upwards and register higher values; conversely, when there is more selling pressure compared to buying pressure, the indicator will move downwards and register lower values.
Divergences: A divergence between the RVI line and price movements can signal whether momentum is likely to continue or reverse course shortly after that.

This feature can be used in: