Relative Momentum Index

The Relative Momentum Index is an oscillator consisting of average upward price changes divided by the average absolute price change.  The index is expressed as a percentage.

Relative Momentum Index

The Relative Momentum Index (RMI) is an oscillator consisting of average upward price changes divided by the average absolute price change.  The index is expressed as a percentage.

The Relative Momentum Index was developed by Roger Altman and  was first introduced in the February 1993 issue of Technical Analysis of Stocks & Commodities magazine.

 

Relative Momentum Index Calculation

The Relative Momentum Index is calculated as the ratio of average upward price changes to the average absolute price change.   The index requires two parameters.  The first parameter is the number of periods used to determine price change.  The second parameter is the number of periods to average these changes over.



Relative Momentum Index Interpretation

Roger Altman's Relative Momentum Index is based on the Relative Strength Index (RSI).  Impressed with the RSI's sensitivity to the number of look-back periods, but frustrated with it's inconsistent oscillation between defined overbought and oversold levels, Mr. Altman added a momentum component to the RSI. 

Since the Relative Momentum Index is based on the RSI, many of the same interpretation methods can be applied. In fact, many of these "situations" are more clearly manifest with the RMI than they are with the RSI.  

Relative Momentum Index example


The Relative Momentum Index usually tops above 70 and bottoms below 30. The RMI usually forms these tops and bottoms before the underlying price chart.

Increasing Relative Momentum Index values indicate that the price is on an uptrend. Decreasing RMI values indicate that the price is on a downtrend. 

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