Description

• Developed by Michael Poulos, RWI helps to understand price movement walk
• RWI is use to determine whether price is trending or making a random walk in a trading range or non-directional
• It uses price range and compares it with random movement Larger the range significant is a trend
• It consists of two lines RWI high & RWI low

Interpretation

• Author has recommended using 2-7 period or bars for short term trading and 8-64 for long term trend catching
• Stock is in uptrend if RWI of the highs is greater than 1
• Stock is in downtrend if RWI of the lows is greater than 1
• Long term RWI of high trailing above 1, is a buy signal. For best buy, also look for RWI of low of short term to be above 1
• Long term RWI of low trailing above 1, is a sell signal. For best buy, also look for RWI of High of short term to be above 1

Default Parameters Used/Inputs

• High Line
• Low Line
• Close Line
• Min
• Max

Returns/Output

RWI values of stock based on the specified period

Formula

RWIhigh = HI - Lo.n) / (ATR.1(n) * √(n))
Where, Current high is constant & Low as well as ATR of each historical day are used
Maximum value will be current bar, RWIhigh. Go back n days
RWIlow = HI.n - Lo) / (ATR.1(n) * √(n))
Where, Current low is constant & high as well as ATR of each historical day are used
Maximum value will be current bar, RWIlow. Go back n days