Derivative Oscillator: Double-Smoothed RSI and Signal Histogram

Summary

The Derivative Oscillator, attributed to Constance Brown, is presented as a momentum indicator built from a repeatedly smoothed relative strength index. The RSI is first smoothed with an exponential moving average and then smoothed again with a second exponential moving average. A simple moving average of that result forms the signal line; the oscillator histogram is the difference between the twice-smoothed RSI and its signal.

The stated default settings are 5 and 3 for the two exponential smoothing stages and 9 for the signal average. The indicator exposes five inputs: RSI period, both EMA periods, signal SMA period, and applied price. The document defines the calculation but offers no trading rules, market examples, or performance evidence, so it explains construction rather than demonstrating predictive value.

Key ideas

• The indicator applies two exponential smoothing stages to an RSI series.
• A simple moving average of the smoothed RSI serves as its signal line.
• The oscillator value is the difference between the twice-smoothed RSI and the signal line.
• The listed defaults are smoothing periods of 5 and 3, followed by a signal period of 9.
• The document explains the formula but gives no 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.