Relative Strength

Relative Strength compares two instruments to assess the evolution of one price relative to the other.

Relative Strength is often used to compare the performance of a stock against a market index.

Axial Finance allows displaying Relative Strength in two different ways:

• In the main chart, with on one side the curve of the selected instrument in the chart and on the other side the curve of the reference instrument configured in the indicator, with prices of the second calculated as a relative variation from the first.
• In a secondary chart, with the percentage difference of the selected instrument in the chart relative to the reference instrument configured in the indicator.

Important

The result of Relative Strength depends on the starting point in time of the comparison.

By default, Axial Finance sets this starting point at the first price visible in the chart, taking into account any horizontal offset applied by the ZoomCurseur tool.

When using Relative Strength in Market Screening, the notion of first visible price in the chart does not exist. In this case, it is necessary to configure the additional parameter called "Origin" in the indicator, which defines the number of periods back to set the start of the comparison.

Example

Interpretation

• When the first instrument's curve is rising above the second, it means this first instrument has better performance than the second (positive percentage).
• When the two curves move crossing each other, it means the two instruments have comparable performance.
• When the first instrument's curve is falling below the second, it means this first instrument has worse performance than the second (negative percentage).

Notes

If the historical data of the two instruments have different durations, the application will only plot Relative Strength over the common history period of both instruments.