Rank Correlation Index (RCI) on Gold

What it shows

Beneath the candles, a blue RCI line moves inside a light blue strip that runs from -80 to 80, split by a faint zero mark. A reading above 80 means the window was close to a clean climb, and below -80 close to a clean drop.

How Pravex works it out

1. Take the last 10 candles and rank them by time: the newest candle is 1, the one before it 2, and so on.
2. Rank the same candles by price: the highest price is 1, the next 2. If two prices are equal, they share the average of their ranks.
3. Compare the two rankings with the Spearman rank correlation and show it in percent.
4. The size of each move never enters. Only the order of the prices counts.
5. Try three invented closes in a row, 10, 11 and 12: the price ranking matches the time ranking exactly, so the RCI is +100, however small the steps.

Settings

Setting	Default	What changing it does
Length	10	How many candles are ranked. A short window flips quickly and reaches the extremes often; a long one moves slowly and rarely touches them. The smallest length is 2.
Source	Close	The price that gets ranked. With hl2, a candle that closes at its low but trades high still ranks by its midpoint.

How traders read it

Above the 80 mark the window is a near-perfect climb; under -80 a near-perfect drop. The turn back inside the strip says more than the first touch, because the order has started to break.

A cross of the zero line says the order of prices changed from mostly falling to mostly rising, or the reverse. It is a slow signal, because the whole window has to reorder first.

Since only the order counts, one huge candle and one tiny candle weigh the same. That makes the line steady through spikes, and it also hides how big the move was. Read it next to the price, not instead of it.

When it misleads

In a long, clean trend the RCI sits at the edge for many candles, so a reading near +100 is not a reason to expect a turn by itself. In a sideways stretch it swings between the bands without any real direction. In a run of tiny gold candles many closes are nearly equal, and equal prices share ranks, which makes the line twitch around zero.

Questions and answers

How many candles should the RCI rank?

Pravex ranks 10. On 15-minute gold that covers two and a half hours, so it flips with each swing; 26 or 52 on daily candles shows the larger order of a month or a quarter.

Why does the RCI ignore the size of a move when RSI does not?

RSI weighs how far price moved up and down. The RCI ignores the size of the moves and ranks the prices, so it measures how orderly the move was.

Is an RCI near 0 a sign of a range?

Usually. The ranking by price has no link to the ranking by time. Prices went up and down without a lasting direction.

What is the RCI Ribbon?

It draws three RCI lines with different lengths on one pane, so you can see a short, a middle and a long window together.

Related: RCI Ribbon, Trend Strength Index, Detrended Price Oscillator, every indicator.