The Relative Momentum Index was developed by Roger Altman and was introduced in his article in the February, 1993 issue of Technical Analysis of Stocks & Commodities magazine.
Altman’s describe his indicator in this way :
“the RSI is modified by counting up and down days starting from today’s close relative to the close Y days ago, where Y is not necessarily 1 as required by the RSI. The RSI is released from the arbitrary restriction of comparing consecutive days for price changes” changing the period to 20 days, but with Y set at 5 instead of 1 makes it “easier to anticipate tradable reversal points compared with the one-parameter RSI. This modification is called the relative momentum index (RMI), in which momentum is substituted for strength, because a momentum index is usually obtained by creating a moving average of the most recent closing price compared with the close Y days in the past.”
I personally use both RSI (14 period) and RMI (20,5, with Exponential moving average). I find that RSI is better in showing divergences while RMI is better is pointing out overbought/oversold areas.
Blue skies
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// inputs //Period = 20 //Lookback = 3 //ob = 70 //os = 20 //calc momup=max(close-close[lookback],0) momdown=max(close[lookback]-close,0) up = average[period,mm](momup) dn = average[period,mm](momdown) rm=up/dn rmi = 100*rm/(1+rm) return rmi as "RMI", ob,os |
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Thank you for this one. I played around with this indicator with Bollinger Bands around it instead of the fixed 30 and 70 lines to make to make the indicator more flexible and adaptive.