Comparing Smoothed RSI with RSI Applied to a Moving Average

Summary

The document distinguishes two ways to combine smoothing with the Relative Strength Index. In the first, RSI is calculated from the original price series and then smoothed. In the second, a moving average is calculated first and RSI is applied to that moving-average series; this RSI can then also be smoothed. These sequences produce different indicator constructions, even though both involve RSI and smoothing.

The indicator description offers a visual comparison mode that plots both approaches together, identifying the RSI of the moving average as the green line. This helps users inspect how the order of operations changes the plotted signal. The document does not specify parameter choices, define a trading rule, or provide backtests or performance evidence. It therefore explains an indicator design distinction rather than establishing that either variant is more effective. Any interpretation would depend on the chosen moving-average and RSI settings, which are not supplied here.

Key ideas

• One approach smooths RSI after calculating it from the underlying series.
• Another approach calculates a moving average first and then applies RSI to that average.
• The RSI of the moving average can itself be smoothed.
• A display option allows both constructions to be compared on one chart.
• The document provides no parameters, trading rules, or performance evidence.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.