RSI on Adaptive Averaged Prices to Filter False Signals

Summary

This indicator variation calculates RSI from an adaptive, smoothed price series rather than raw prices. The document argues that filtering prices before calculating RSI can suppress some short-lived price noise at the input stage, making the resulting oscillator adaptive as the averaging behavior changes. It lists simple, exponential, smoothed, and linearly weighted moving averages as possible filters.

Suggested use follows conventional RSI practice: signals may come from the indicator’s slope or crossings of selected levels, with experimentation recommended for parameters. The note gives no formula for the adaptive lookback, specific settings, test results, or comparison against standard RSI. Its claim that filtering removes false signals is qualitative, and smoothing can also delay responses or discard useful moves; traders would need to evaluate those tradeoffs empirically.

Key ideas

• The indicator computes RSI using an averaged price series instead of raw price.
• The averaging step is intended to filter some price noise before RSI is calculated.
• Simple, exponential, smoothed, and linearly weighted averages are listed as filter choices.
• The note suggests using slope or level crossings but provides no parameter guidance or test evidence.

Tags

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