Connors CRSI was developed by Larry Connors and is used for identifying overbought and oversold areas. One notable difference from the CRSI to the traditional relative strength index (RSI), is that the CRSI uses different levels for overbought and oversold readings. Connors stated that readings above 90 are considered overbought and readings below 10 are considered oversold.
Interpreting the Connors RSI (CRSI)
The two main ways of interpreting the Connors CRSI is by spotting potential overbought and oversold levels. These levels occur when momentum is likely to change. To put it another way, a substantially oversold over overbought position means that prices could be in process of reverting to the mean, or that prices are about to experience a pullback.
One thing to note about the Connor CRSI is that as the indicator is more sensitive than the RSI, sometimes signals occur to early. To combat against the sensitivity of the CRSI, one can incorporate different elements of technical analysis such as trendlines and other momentum indicators to ensure that one is getting the correct signals.
You can also adjust the thresholds for overbought and oversold areas in Trading View. These thresholds may need to be changed to adapt to the particular index you are measuring against. Changes should be made only after through research and analysis and after testing the original indicator’s sensitivity.
Calculation of the Connors CRSI
The connors CRSI uses the original relative strength index (RSI) originally developed by Wilder. It also incorporates the original UpDown strength and ROC calculation. The ROC is the lookback period while the UpDown strength is the number of consecutive days the price has closed up or closed down.
The final calculation in the series is finding the average value of the three components, which can be calculated as the following:
CRSI(3,2,100) = [ RSI(3) + RSI(UpDown Length,2) + ROC(100) ] / 3