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Why is the RSI considered more stable than most momentum measures?

It uses only the highest values in its calculation

It uses a fixed number of values for comparison

It incorporates all values of the period in its calculation

The Relative Strength Index (RSI) is considered more stable than most momentum measures primarily because it incorporates all values of the chosen period in its calculation. This includes both upward and downward price movements, providing a comprehensive view of price momentum. By assessing the average gains and losses over a set timeframe, the RSI creates a balance that reflects the overall market behavior.

This full inclusion allows the RSI to smooth out the volatility that might be present in other momentum indicators that focus only on recent price movements or selective high values. Consequently, this broader data input contributes to a more reliable measure of momentum over time, reducing the likelihood that short-term fluctuations will skew the indicator.

In contrast, other options lack this same degree of comprehensiveness. For instance, some measures may focus on only the highest values or recent price changes, which could lead to instability and less reliable interpretations of market momentum. By using all values in the period, the RSI presents a more stable and nuanced assessment of price dynamics.

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It is weighted towards recent price changes

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