The Slow Relative Strength Index is a version of the classic Relative Strength Index (RSI), adapted for usage on longer-term charts. While closely resembling the RSI, its calculation mechanism involves comparing the close price with its exponential moving average instead of its previous value. The overall sense of the indicator, though, remains the same: it compares the magnitude of a stock's recent gains to the magnitude of its recent losses on the scale from 0 to 100.
The Slow RSI plot is accompanied by three reference levels: overbought, oversold, and middle line. Default values of these levels are respectively 80, 20, and 50, which, of course, can be adjusted, especially if you use custom parameters for moving average calculations. In general, values of the Slow RSI and their behavior in relation to reference levels can help identify price direction, momentum, overbought and oversold conditions, trend strength, and trend direction. Statistically, the Slow RSI is said to work better in weaker trends and on longer time frames. In strong trends and short-term charts, the classic version of the indicator might be more useful.
||The period used for calculation of the exponential moving average.|
||The period used for calculation of the RSI.|
||Defines the overbought level.|
||Defines the oversold level.|
||The Slow Relative Strength Index.|
||The overbought level.|
||The middle line fixed at the level of 50.|
||The oversold level.|
1. "The Slow Relative Strength Index " by Vitali Apirine. Technical Analysis of Stocks & Commodities, April 2015.
*For illustrative purposes only. Not a recommendation of a specific security or investment strategy.