Relative Strength Index (RSI, Wilder)

Measures: the balance of up-bar gains vs down-bar losses over n bars, normalized to 0–100. High = buyers have dominated recently; low = sellers have.

Formula:

gain_t = max(C_t − C_(t−1), 0)
loss_t = max(C_(t−1) − C_t, 0)

First n bars (simple seed):
  AvgGain = (1/n) Σ gain     AvgLoss = (1/n) Σ loss

Thereafter (Wilder smoothing):
  AvgGain_t = (AvgGain_(t−1) × (n−1) + gain_t) / n
  AvgLoss_t = (AvgLoss_(t−1) × (n−1) + loss_t) / n

RS  = AvgGain / AvgLoss
RSI = 100 − 100 / (1 + RS)        (RSI = 100 when AvgLoss = 0)

Parameters: n = 14.

How Thresher uses it (Momentum family): zone-based, trend-following — this is a deliberate departure from the pop-TA "buy under 30, sell over 70" reading:

RSI	Interpretation	Points
55–72	healthy bullish momentum	+0.30
> 72	strong but stretched — sets rsiHot flag	+0.10
45–55	neutral, no vote	0
28–45	healthy bearish momentum	−0.30
< 28	weak but washed out — sets rsiCold flag	−0.10

The extreme flags feed the confidence penalty (−8 when entering a fresh trade into an extreme, II.4) rather than reversing the vote — because in real trends RSI can stay pinned above 70 for weeks, and treating that as a short signal is one of the classic ways naive TA loses money.

Limitations: RSI is a derivative of price, not new information — it will diverge meaninglessly on low-volume drift. It carries no notion of why price moved.

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