RSI vs. RS

In exploring the parameters of RSI and RS (Average Gain / Average Loss), I created a spreadsheet (attached) showing both RS at every level of RSI, beginning with RSI = 1 and ending with RSI = 100. I then created a column of figures showing the relationship of each RS level to its prior level. For example, if when RSI = 25, RS = 33/100, meaning that average gain to average loss is .33:1. I then noticed that this relationship accelerates as RSI moves from 1 to 100. For example, when RSI = 26, RS = 35/100, meaning that average gain to average loss is .35:1, an increase of 2/100s. To illustrate the acceleration of this increase as RSI moves higher, the increase from RSI = 80 to RSI = 81 is 426/100, meaning that the average gain to average loss is 4.26:1. It seems to me that this acceleration indicates that greater buying pressure is required to move the RSI line higher, and less selling pressure is needed to move it lower. This might explain why there is only a 35 point differential between bear market support and resistance, while there is a 40 point differential between bull market support and resistance. The bears have less energy than the bulls. I am wondering if you have noticed this phenomenon, and if so, what conclusions has it brought to mind, and what, if any, strategies has it engendered.

Thank you.

William Halprin

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