RCI 3line(Rank Correlation Index)

3-Line RCI (Rank Correlation Index) Documentation

This indicator is a statistical oscillator that calculates the correlation between price rank and time rank. It displays three RCI lines (Short, Medium, and Long-term) simultaneously to help traders visualize market cycles, momentum, and overbought/oversold conditions.

1. What is RCI?

The Rank Correlation Index (RCI) measures how closely the sequence of prices matches the sequence of time.

Close to +100%: Strong positive correlation (Price is consistently rising over the period).

Close to -100%: Strong negative correlation (Price is consistently falling over the period).

Near 0%: No correlation (Price is consolidating or moving randomly).

Unlike standard oscillators like RSI, RCI focuses on the order of prices rather than the magnitude of change, making it excellent for identifying the "rhythm" of the market.

2. The Three Lines Strategy

Using three different periods allows for a multi-dimensional view of the trend:

Period

Default

Role

Short-term

9

Identifies immediate entry/exit timing and short-term exhaustion.

Medium-term

26

Confirms the primary trend direction for the current timeframe.

Long-term

52

Provides high-level market context and "Anchor" trend direction.

3. Key Trading Patterns

A. Triple High / Triple Low (Overextended Market)

When all three lines gather above +80% or below -80%.

Indication: The market is extremely overextended in one direction.

Strategy: Watch for the Short-term line to turn back toward the center; this often signals a significant trend reversal or major correction.

B. Trend Following (Buying the Dip / Selling the Rally)

Occurs when the Long and Medium lines are pinned at one extreme (e.g., above +80%), but the Short line temporarily drops toward 0% or -80%.

Indication: A temporary "correction" within a strong trend.

Strategy: When the Short-term line turns back in the direction of the Long/Mid lines, it signals a high-probability entry point (Trend Continuation).

C. Golden and Death Crosses

The Short-term line crossing over the Medium-term line.

Golden Cross: Short line crosses above Mid line (Bullish momentum).

Death Cross: Short line crosses below Mid line (Bearish momentum).

4. Input Parameters

Periods (9, 26, 52): These are the classic settings used by Japanese traders. They can be adjusted based on the asset (e.g., crypto may require shorter periods).

Overbought/Oversold Levels: Set to +80 and -80 by default. These serve as the threshold for "extremes."

Visuals: Each line's color and thickness can be customized in the settings menu for better clarity.