The Deep Reversal Indicator as a Powerful Market Predictor

Using The Deep Duration Technique For Market Predictions

Sofien Kaabar, CFA

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Market reversals can sometimes be predicted by a few techniques when conditions are normal. This article presents a reversal technique referred to as the deep duration technique.

The Concept of Extreme and Deep Duration

First introduced by J. Welles Wilder Jr., the RSI is one of the most popular and versatile technical indicators. Mainly used as a contrarian indicator where extreme values signal a reaction that can be exploited. Typically, we use the following steps to calculate the default RSI:

  • Calculate the change in the closing prices from the previous ones.
  • Separate the positive net changes from the negative net changes.
  • Calculate a smoothed moving average on the positive net changes and on the absolute values of the negative net changes.
  • Divide the smoothed positive changes by the smoothed negative changes. We will refer to this calculation as the Relative Strength — RS.
  • Apply the normalization formula shown below for every time step to get the RSI.

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Sofien Kaabar, CFA
Sofien Kaabar, CFA

Written by Sofien Kaabar, CFA

Top writer in Finance, Investing, Business | Trader & Author | Bookstore: https://sofienkaabar.myshopify.com/

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