Estimating the Next-Candle Price for a Target RSI Value

Summary

The indicator estimates the next closing price that would bring a Wilder-smoothed RSI to a chosen value. It starts from the current RSI and the smoothed average gains and losses, then algebraically solves for the price change needed to reach the target. If the requested RSI is below the current reading, the calculation solves for a decline; if it is above, it solves for a rise. The example uses a target RSI of 70 and a period of 14.

This produces a conditional price level based on the current close and the indicator's smoothed gain and loss state. It is a calculation aid for interpreting RSI thresholds, not a forecast that price will reach that level. The document provides no market examples, validation, or performance evidence, and the estimate depends on the specified RSI formulation and period. It also does not discuss intrabar movement or how the level changes as new prices arrive.

Key ideas

• The indicator solves for a next closing price associated with a selected RSI target.
• It uses Wilder-smoothed gains and losses to reverse the RSI calculation.
• The calculation direction depends on whether the target RSI is above or below the current reading.
• The output is a conditional level, not evidence that price will reach it.

Tags

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