RMI

Relative Momentum Index (RMI) is a modification of the traditional RSI indicator, proposed by Roger Altman. Unlike the classic RSI, which calculates the ratio of price increases and decreases over a certain period, RMI takes into account the relative price change over a selected momentum period.

To use the indicator, you need to use the RelativeMomentumIndex class.

Description

The Relative Momentum Index (RMI) improves the classic RSI by adding a momentum period parameter. This allows traders to adjust the indicator's sensitivity without changing the main calculation period.

Like RSI, RMI oscillates between 0 and 100:

• Values above 70 usually indicate an overbought market
• Values below 30 indicate an oversold market
• The central line at 50 serves as a reference point for determining the main market movement direction

RMI is particularly useful for identifying potential trend reversal points and confirming the strength of the current trend.

Parameters

• MomentumPeriod - momentum period that defines the time lag for price comparison.
• Length - main period for calculating the indicator (similar to the period in RSI).

Calculation

The RMI calculation is performed in several steps:

1. Calculate momentum as the difference between the current price and the price n periods ago:

   Momentum = Price(current) - Price(current - MomentumPeriod)
   

2. Divide momentums into positive (U) and negative (D):

   If Momentum > 0, then U = Momentum, D = 0
   If Momentum < 0, then U = 0, D = |Momentum|
   

3. Calculate the average values of positive and negative momentums over the specified period:

   AverageU = SMA(U, Length)
   AverageD = SMA(D, Length)
   

4. Calculate relative strength:

   RS = AverageU / AverageD
   

5. Convert to Relative Momentum Index:

   RMI = 100 - (100 / (1 + RS))
   

See Also

RSI Momentum