Posted Wednesday, November 05, 2014
Last Active: Thursday, July 12, 2018
Rank Correlation Index Spearman (RCI)
The indicator Spearman Rank Correlation Index's (RCI) is a statistical oscillator based on the correlation model provided by the mathematician Charles Spearman.
The indicator shows statistical relations between date and price as a correlation without the relationship between the two variables is of affine type. The idea is to find correlation between the ranks of values instead of the values themselves.
- The RCI value of 100 shows the positive correlation between the rising Price and Date.
- On the other hand the value of -100 indicates negative correlation (the Price falls continuously while the Date continues to rise (falling dates are not possible))
In some sources the signals should be confirmed when indicator reaches the oversold/overbought levels:
- When the RСI crosses Zero line from below – it is considered a buy signal;
- When the RСI crosses Zero line from above – it is considered a sell signal;
If RCI is higher than 80 lvl (overbought), then it’s time to sell, and if RCI is lower than -80 lvl (oversold) – it’s time to open a buy position.
-ACTFX© Forum Administrator