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Kairi Relative Index Leading Indicator

Here is a leading indicator based on the relatively obscure Kairi Relative Index. The Kairi comes from Japan and is similar to the popular RSI , although it is believed that it predates the RSI significantly.

The Kairi measures the difference between the current price and its SMA as a percentage of the moving average.

We made a few modifications to the Kairi to improve its timing and balance its sensitivity. First, we calculated a 'fast' and 'slow' Kairi Relative Index. To do this, it calculates the difference between the current price and a SMA with a length of 7 periods for the fast Kairi. Then, the difference between the current price and an SMA of length 24 is calculated for the slow Kairi.

The big modification is using a 25 period SMA of slow Kairi Relative Index values as the threshold for buy and sell signals. When the fast Kairi line crosses above the white line(the threshold) it is considered a bullish signal, while a bearish signal comes when it crosses back below the same white line. This solved the issue with the Kairi having slower reaction time than the RSI . As the chart shows, this setup allowed it to catch not only major trends but also predict unexpected price spikes.

Users can adjust all 3 lengths, as well as adjust the option to have the slow Kairi displayed on the chart(shown in second pane).

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-Profit Programmers
http://www.profitprogrammer.com
nice :)
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