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Barry,
In his 1978 book, New Concepts in Technical Trading Systems, Welles
Wilder does not apply any kind of a moving average to his RSI. In his
example he uses a 14 day RSI.
He does have a couple of pages of tips about how to use the RSI, such as
identifying failure swings, divergences, and support and resistance
levels. He also shows how trend lines can be applied to the RSI.
I have had good results using a technique I learned from Tom Aspray at a
ComprTrac Seminar a long time ago. He recommended a 9 bar RSI with a 21
bar Weighted Moving Average of the RSI to identify the trend of the
RSI.
I hope this helps.
Jim Sullivan
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Barry Kaufman wrote:
>
> Does Welles Wilder apply a moving average to his original RSI, and if
> so what kind? I don't have his book. Three other books I have give
> three different interpretations. "The Encyclopedia Of Technical
> Market Indicators", mentions an exponential MA on page 433 and in the
> table foot note on page 434 it describes a hybrid exponential -
> simple MA.
>
> "Martin Pring On Market Momentum", appears to define by example a
> simple moving total. In Tusshar Chande "The New Technical Trader",
> RSI is covered in a number of sections. In one place it is based on
> the sum of up days and down days, which should have a simple
> averaging effect. But then he says "Wilder's method effectively uses
> a 27 day exponential MA to smooth Su and Sd values before computing
> RSI".
>
> Chande's book sold me on the benefit of CMO over RSI. However, when
> he defined a new hybrid momentum - stochastic indicator, he made it
> STO-RSI rather than STO-CMO. Why?
>
> Has anyone else out there dealt with the same questions?
>
> Thanks, Barry Kaufman
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