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Momentum inertia — one school’s reading of RSI extremes as fuel, not exhaustion

By TradingPrimer · Published 1 Sep 2026

Every beginner is taught that RSI above 70 means overbought and RSI below 30 means oversold. There is an entire school of chart reading, taught in our own slide course, that throws both words away and reads a high RSI as the opposite of a warning — as evidence of fuel. This lesson lays that reading out honestly, gives it the strongest version of its own case, and then does something nobody who teaches it does: prices it. Along the way, one small piece of algebra turns RSI from an abstract oscillator into a headcount you can do on your fingers, and one modelled correction shows that the school’s own invalidation rule does not fire until the entire impulse has already been given back.

What does “momentum inertia” actually claim?

That a market which has just proved one side is overwhelming the other does not reverse that proof in a single move — so a high reading is a statement about fuel, not about exhaustion.

The claim has a specific trigger. In an up-move, RSI must close a candle at 80 or above; in a down-move, at 20 or below. When that happens, this school treats the wave as having inertia: after the correction that follows, it expects another wave back to at least the old high (or, in a downtrend, back to at least the old low). The practical payoff is that you get to draw the next wave before the correction has finished, instead of waiting for the correction to prove itself.

You have already met the ingredient this rests on. In lesson 19 we established that RSI is a ratio — average gain over average loss, squashed onto a 0–100 scale — and that RSI 80 corresponds to a 4:1 ratio. What inertia adds is a direction of reading. The classical school looks at 4:1 and says stretched. This school looks at 4:1 and says one-sided, and then asks how a market that one-sided is supposed to flip in a candle or two.

Both readings are interpretations. Neither is established by the number. What follows gives the inertia reading the strongest version of its own case, and then measures what obeying it costs — because the cost is the part nobody teaching it puts in writing.

What does an RSI close above 80 actually require of the candles?

Under one simplifying assumption, something surprisingly plain: eleven of the last fourteen closes have to be up.

Here is the piece of algebra that makes RSI legible. Suppose, just for translation, that every candle in the lookback window has the same size m. If u of the last 14 closes were up and the rest were down, then the average gain is u m / 14 and the average loss is (14−u) m / 14. The ratio is u / (14−u), and when you push that through the RSI formula the candle size cancels completely:

RSI = 100 × u ÷ 14

The oscillator becomes a headcount. Not a metaphor for one — literally the percentage of the last fourteen closes that were up, expressed as a number between 0 and 100. So:

Two honest caveats before anyone takes this to the chart. Real candles are not the same size, and the standard RSI uses Wilder’s exponential smoothing rather than a flat 14-candle average, so this is a translation device, not a measurement. It tells you what kind of stretch a reading corresponds to. It does not replace the indicator.

With that said, look at what the table does to the vocabulary. “Eighty percent of the market is buying” is a thing people say about RSI 80, and it is not true — RSI knows nothing about how many participants there are. But 80% of the last fourteen closes were up is true, exactly, under the equal-candle assumption. The folklore was reaching for the right shape and grabbing the wrong noun.

How wide is the band you are told to stand aside in?

Two point eight candles. That is the whole of it.

This school treats 40–60 as a zone with no information in it: buying pressure and selling pressure are close enough to even that the frame has no opinion, and the correct action is to look at a different frame or do nothing. Run that band through the headcount and it spans from 5.6 up closes to 8.4 up closes out of fourteen — a width of 2.8 closes.

That number is worth sitting with, because it explains something and warns about something.

It explains why so much of chart time is spent inside the band. Three ordinary candles going the same way can carry RSI across the entire no-opinion zone. Sideways price does not need to be dull for RSI to be dull; it just needs the up and down closes to be roughly balanced, which is the definition of the range state you learned to diagnose in lesson 16.

It warns that the boundaries are not cliffs. The difference between an RSI that closes at 80 and one that closes at 76 — between “inertia confirmed” and “nothing happened” under this school’s rules — is 11.2 closes against 10.64. That is 0.56 of a single candle. This is exactly the pattern lesson 24 found in the “wick at least twice the body” rule: a threshold stated to two decimal places, sitting inside a band of noise several times wider than the argument about it. Anyone insisting on 80.0 rather than 79.4 is insisting on half a candle.

Where does an RSI pattern begin and end?

At two crossings — and if you cannot point to both of them on the chart, you are not looking at a pattern.

This is the piece of the method everything else rests on, and it is almost never stated plainly. The school does not read the raw RSI line. It puts two moving averages onto the RSI itself — a fast one and a slow one — and reads the relationship between the three lines. Those two averages are what give a pattern its edges:

The exact settings, so you can put this on a chart right now

Three indicators, and the second and third are the part everyone gets wrong — both moving averages are applied to the RSI, not to price:

The order matters. Add the RSI first. Then add the EMA, open its settings, and change the field labelled Source from close to the RSI you just added — it appears in the dropdown under the indicator’s own name. Repeat for the WMA. If you skip that step you get two ordinary price averages sitting in the wrong pane, none of the crossings below land where the method says they should, and the whole thing looks like nonsense — which is exactly what happens to most people who try this once and give up on it.

Two notes on the numbers. 9 and 45 are that school’s settings, not laws of nature — a faster pair produces more knots and more noise, a slower pair produces fewer and later ones, and the trade-off is the same one lesson 18 measured on price averages. And the periods are counted in candles on the frame you are looking at, so a WMA 45 is roughly a week and a half of context on the four-hour chart and about six hours of it on the five-minute chart. The settings do not change; what they mean does.

• The beginning is where RSI cuts up through both averages at a single common crossing point — the three lines squeeze into one knot and then fan apart. The trend on that frame is up once the EMA 9 also crosses above the WMA 45 — RSI is fast and can cross while the trend has not changed, so the averages crossing is the confirmation — and provided RSI came from under 40; a cross that starts inside 40–60 has no wave validity and the frame stays sideways.
• The end is the mirror image: RSI comes back into 40–60 and cuts back down through both averages, and the EMA 9 crosses back below the WMA 45. If RSI crosses back but the averages have not, it is only a pullback inside the wave. A wave that ends (RSI and the averages crossing back) before RSI reached its zone (over 60 up, under 40 down) was not a clean wave: the pressure was absorbed by the frames around it, and the frame reads sideways. A down-trend pattern is the same thing with the directions reversed.

Between those two crossings the shape is always the same, and it is worth learning as a shape rather than as a list. The three lines spread apart — that is the side that is winning, gaining. They reach a widest point, which is the moment the crowd cannot get any greedier or any more frightened. Then they narrow back toward each other, either because the winning side is tiring or because the other side has started to participate. Then they cross, and the pattern is over.

Two consequences follow immediately, and both are practical.

A steep, wide spread is a strong trend; flat lines sitting on top of each other are not a trend at all. That is the same 40–60 no-opinion state from the section above, seen through a different instrument — and it is why “RSI crossed 60” on its own is not a signal. The crossing has to be part of a pattern that has a beginning.

The word single is doing real work in both of those. If RSI crosses one average, wanders for five candles, and crosses the other later, that is not a crossing point — that is chop. Requiring the three lines to meet at effectively one place is what makes the event rare enough to carry information, and it is the single easiest thing to check on a chart.

Entering while the three lines are still spreading wide apart is entering at full speed. The place this method looks for an entry is where they are narrowing, not where they are widest — because a spread that wide cannot reverse in one candle, in the same way that any average needs time to turn. The lines have to converge before they can cross.

What are the four points, and which one are you actually trading?

Four — and every one of them is an event on the RSI pane, not on the price pane. The trade is at point 4.

This is the part that gets garbled most often, because people describe the four points by what price is doing. The method does not define them that way. Each point is a specific thing the RSI line does relative to its two moving averages and to the 80 and 40 levels; price is the consequence you read off afterwards. Here they are, in the up-wave version:

In a down-wave every line mirrors exactly: RSI cuts down through both averages, holds below 20, cuts back up through both, then rallies above 60 before cutting back down. Same four points, opposite signs.

Three things in that table do real work, and all three are routinely lost in the retelling.

Point 1 and point 4 are the same geometric signal. Both are “RSI cuts up through both averages at one common point”. Nothing on the RSI pane distinguishes them. What distinguishes them is what happened above: at point 4 there is already a completed inertia reading behind you, so the crossing arrives carrying a destination — at least the old high. That is the whole reason the method bothers to number the cycle. The same squiggle is a beginning when nothing precedes it and an entry when something does.

Point 2 creates a scenario, not a trade. There is nothing to buy at point 2: price is at the top of an impulse. And it is not a single touch of the line. A genuine inertia reading pushes to roughly 85–90 and stays above 80 for a run of closes; one wick through 80 that immediately falls away is the same shape with none of the content. What point 2 buys you is permission to draw the next wave in advance, which is the only real edge this method offers.

Point 3 is the most misread point on the cycle. It is tempting to treat the down-crossing as the entry, because it is a clean, visible event and it comes with the story that the correction has started. But when RSI cuts down through both averages, the market is falling — the correction is beginning, not ending. Buying there means buying into the first candle of a decline whose depth nobody knows yet. The section on waiting, below, puts a number on that mistake: on the worked model it is the difference between needing to be right 61.8% of the time and needing 33.3%.

And what does the completion wave do when it arrives? The method is specific, and honest about the fork: it either breaks the old high and prints a fresh point 2, in which case the trend is intact and the cycle starts again, or it only tests the old high and turns back down. Which of the two you get is not random — it is read from how deep the correction went, which is the next section.

How deep is the correction at point 4 allowed to go?

Under 40 — it has to get there for the point-4 cross to count as a wave at all — and a correction that goes far through 40 is read as a downgrade, not as a cancellation.

The rule as taught is one sentence. RSI must come from under 40 before it crosses back up, otherwise the cross has no wave validity and the frame is sideways; but if the correction drives RSI too deep — well below 40 in a rising wave, giving back most of the impulse — the completion wave usually comes back weak and only tests the old high instead of breaking it. In a falling wave, the mirror: if the correction lifts RSI well above 60, the completion usually only tests the low. It does not say the scenario is void and it is not a stop-loss. It changes what you should expect the completion wave to achieve, which changes where you take profit.

That rule is stated in RSI units, and you place orders in price units. So the useful question — which nobody teaching it answers — is: what does RSI 40 correspond to in price? The answer turns out to be the most important thing on this page, and it is not what you would guess.

Set up the model. Price runs $60,000 to $70,000 and RSI closes at exactly 80 at the high, which pins the average candle: RSI 80 means 11.2 up closes and 2.8 down closes in the window, a net travel of 8.4 candle-lengths, so $10,000 over 8.4 gives $1,190 a candle. Now run Wilder’s smoothing forward through corrections of different shapes — same proportion of down closes each time, but different candle sizes — and record how much of the impulse has been given back at the moment RSI first touches 40:

Read that column again, because it is the finding of this lesson. RSI 40 does not correspond to any particular depth of pullback. The same reading of 40 can mean price has given back a third of the move or all of it and more. Two charts that look nothing alike — one a shallow drift, the other a collapse through the origin — print the identical number on the indicator.

The reason is worth understanding once, because it applies to every oscillator you will ever use. Under equal candles, Wilder’s RSI settles at 100 × (1 − p), where p is the share of closes that are down. RSI 40 means p = 0.6 — six down closes for every four up. Notice what is missing from that formula: candle size. It cancels out completely, because RSI is a ratio of average gain to average loss and scaling every candle scales both. So RSI tells you the proportion of candles going each way. It cannot tell you how much ground they covered.

That single fact is the honest answer to “why do I need fibs and structure if I have RSI?” — and it is exactly what the course material says when it asks for the agreement of moving averages, RSI and the higher timeframes before a setup counts. They are not three confirmations of the same thing. RSI supplies the proportion; the retracement levels from lesson 33 and the structure from lesson 17 supply the distance. Neither substitutes for the other, and a method that used only one of them would be blind in the other dimension.

There is a second thing in that formula worth having. A sideways correction can never reach 40 at all. With down and up closes arriving in equal numbers, p = 0.5 and RSI settles at 50, whatever the candles do. Getting under 40 requires sustained one-way selling. So a chart that stops falling and grinds sideways with RSI stuck in the low 50s is not “failing to confirm” — the scenario is intact. But it has not produced a point 4 either: a cross that starts inside 40–60 has no wave validity, so that frame reads sideways until RSI has actually been under 40 and crosses back up through both averages, with the EMA 9 crossing above the WMA 45 to confirm.

If the scenario is right, what does the trade actually pay?

Between 0.62R and 3.67R against the old high — and which one you get is decided entirely by how deep into the point-4 pullback you are willing to buy.

Point 4 is a zone, not a line: RSI dips under 40 and crosses up somewhere in there, and exactly where depends on the correction. So the entry has to be priced rather than assumed. Use the identity from lesson 33 — entry at retracement level f, stop at the impulse origin, target at the prior high — where reward-to-risk is f ÷ (1 − f) and break-even win rate is exactly 1 − f:

Two readings come straight off that table, and they pull against each other in a way worth sitting with.

The 2R version of this trade is the two-thirds pullback. Not the half-back everyone quotes, and not the shallow dip that feels safest. At $63,330 the trade needs to be right only a third of the time, with the stop where the impulse began and the target at the old high. That is the single most actionable number on this page, because it converts a zone into an order.

But the deepest entries are the ones the method itself downgrades. The 0.786 row pays 3.67R and looks like the best trade on the table — except that a correction that deep is likely to have carried RSI through 40, which is precisely the condition under which the completion is expected to test the old high rather than break it. A deeper entry buys a better ratio on a target the method is simultaneously telling you to lower. Those two effects work against each other, which is why the workable zone is in the middle and not at the bottom.

That downgrade can be priced too, and it is smaller than people assume. A completion that stops at $70,000 instead of extending 20% beyond it to $72,000 takes the two-thirds entry from 2.60R down to 2.00R, moving break-even from 27.8% to 33.3% — a cost of 5.5 percentage points of win rate. Worth knowing, not worth panicking about: a downgraded inertia trade is still a better-priced trade than most things on a chart.

What does waiting for point 4 cost — or save?

It saves 28.5 percentage points of break-even win rate. This is the one lesson on the site where patience is not a purchase but a discount.

Across this course we have been keeping score of what it costs to wait for a confirming signal, and the answer has always been a positive number: you pay for confirmation in win rate. This lesson is the exception, and the reason is worth understanding, because it generalises. What you are waiting for here is not a signal arriving — it is a price improving. Every candle of the correction moves the entry further from the target but much further from the stop, and the ratio improves the whole way down.

Put the two temptations side by side on the same scenario. Both use the same stop at the impulse origin and the same target at the old high; the only thing that changes is which point of the cycle you act on.

Same scenario, same stop, same target. The only thing that changed was waiting for the correction to finish instead of acting on the candle that announced it had started — and it moved the required hit rate by 28.5 points in your favour. That is a larger edge than most indicator settings will ever give you, and it comes from doing nothing.

This is now the fourth time the site has priced the same instinct, and the four numbers together say more than any one of them:

The rule that separates the two cases is simple enough to carry around. Waiting costs you when the thing you are waiting for is the move itself; waiting pays you when the thing you are waiting for is a better price. A neckline break is most of the move. A correction running its course is not — it is the market handing you the same trade cheaper. Apply that test to any confirmation signal anyone ever sells you: ask how much of the intended profit has already happened by the time it fires.

How does this compare with the standard 30/70 reading?

They disagree about what to do, not about what is measured — and each is strongest exactly where the other is weakest.

It would be dishonest to present the inertia reading as a correction of a mistake. The classical overbought/oversold reading is not stupid; it is a mean-reversion strategy, and mean reversion is a real property of ranging markets. Set the two side by side:

Notice that the failure modes are mirror images. On this site, though, the classical fade is not used in either state: inside a range the RSI system simply says “no wave”, and the range trade, if there is one, comes from the box edges in lesson 20, not from RSI touching 70 or 30. That makes the question “which reading is right” a bad question, and “which state am I in” the question that actually decides. Which is lesson 20 again, arriving from a new direction — and it is why this school insists you diagnose the state before you look at any signal at all.

The inertia school does add one thing the classical reading does not have: an explicit rule against acting on a signal in the wrong state. “RSI sitting inside 40–60 means this frame has no opinion” is a rule that removes the range trades from a trend method. The classical reading has no equivalent guard, which is why beginners taught only 30/70 spend their first year shorting things that keep going up. That failure is documented on this site as one of the most common ways year one ends.

When is everything on this page wrong?

Four conditions, and the first is the one you will meet this week.

In a range. Everything here assumes an impulse with a start, an end and a correction. Inside a box, RSI rarely closes beyond 80 at all — and if it does, on the day the box finally gets stretched, the “inertia” you record belongs to a move that has nowhere to go. This method produces its worst signals at the moment a long range ends, which is also the moment it looks most exciting.

When the frames disagree. The version of this taught in our slide course asks, in a bull market, that every higher frame from the daily upward produce its own bullish inertia. When it is fully satisfied the course calls it resonance — the strongest wave it knows — but the entry rule does not wait for it. The working form is the one from lesson 21: the frame above yours trending gives permission, your frame tightening and crossing the same way is the setup, and a reading only on frames below yours is noise. If your frame is out of phase with the one just above it, wait for the larger frame to finish correcting and line up. Reading an inertia signal from a frame you are not trading is the same cost that lesson measured at up to 79.6% of the trade.

When you read it on an unclosed candle. The whole rule is built on closes, and a live candle showing RSI at 81 is not a signal — it is a candle that has not happened yet. This is not pedantry: a reading four hours from settlement can move several points in either direction, and the entire distance between “confirmed” and “nothing” is 0.56 of a close.

When the claim itself is not tested. The strongest version of this school’s case includes a high success rate for completed inertia cycles. We do not publish that number, here or anywhere, because we cannot reproduce it and neither can you — it depends entirely on how the cycle is defined, which frame it is measured on, and which market regime the sample covers. What this page has done instead is give you the arithmetic that surrounds the claim, so that if you decide to test it, you already know what hit rate the trade needs: 33.3% at the two-thirds entry against the old high, 50.0% at the half-back, 61.8% at the shallow 0.382.

One last connection worth carrying forward. Everything on this page is defined on an indicator, and we have just seen the limit that imposes: RSI can tell you what proportion of recent candles went each way, but never how much ground they covered. The same question can also be read off price structure — a close beyond the swing point that was protecting the move — which can be priced exactly; on this site that is the third and least clear system, checked last, and it does not replace the RSI wave. That is the subject of lesson 17, which shows that a change of character on our worked case arrives with 40% of the move already gone, and that waiting for it costs 18.3 points of break-even win rate.

Common mistakes

Frequently asked questions

What settings do I use — what period for the RSI, the EMA and the WMA?

RSI period 14, a fast EMA of 9 and a slow WMA of 45 — and the part that trips almost everyone is that both moving averages are applied to the RSI itself rather than to price. When you add each average, find the field labelled Source and change it from close to the RSI indicator itself - on TradingView a correct setup reads EMA 9 RSI:RSI and WMA 45 RSI:RSI in the legend. Leave it on Close and you get two ordinary price averages in the wrong pane, none of the crossings land where the method says they should, and the whole thing looks like nonsense. Add the RSI first, then add the EMA 9 and the WMA 45 and point both at it. One caveat worth keeping: 9 and 45 are this school's settings, not laws of nature. A faster pair gives more knots and more noise, a slower pair gives fewer and later ones — the same trade-off that applies to any moving average. And the periods count candles on whatever frame you are viewing, so a WMA 45 is about a week and a half of context on the four-hour chart and about six hours of it on the five-minute chart.

Does RSI 80 mean the market is overbought and about to fall?

It means the average up-move over the lookback is four times the average down-move, and nothing at all about what happens next. The headcount translation makes that concrete: under equal-sized candles, RSI equals 100 times the share of the last 14 closes that were up, so RSI 80 is 11.2 up closes out of 14 and RSI 40 is 5.6. That is a description of the recent past, not a forecast. Two schools read the same description in opposite directions - the classical one sees stretch and looks for a reversal, the inertia one sees one-sidedness and plans for continuation after a correction. Neither reading is proved by the number. The number is a measurement; everything else is an interpretation laid on top of it, and knowing which is which is most of what separates a trader from a person repeating a rule.

What exactly are the four points of the inertia cycle?

All four are events on the RSI pane, not on price. Point 1 is where the RSI line cuts up through both of its moving averages - the fast EMA and the slow WMA - at a single common crossing point, after which the three lines fan apart; the wave is confirmed once the EMA 9 itself crosses above the WMA 45. Point 2 is where RSI pushes well above the 80 line and holds there: a genuine bullish inertia takes RSI to roughly 85 to 90 and keeps it above 80 for a run of closes, rather than touching it once and falling away. Point 3 is where RSI cuts back down through both averages, typically from around 75, which says the impulse is over and the correction has started; the wave itself only loses validity once RSI is back inside 40 to 60 and the EMA 9 has crossed below the WMA 45 as well. Point 4 is where the correction carries RSI back under 40 and RSI then cuts up through both averages again at one common point, with the EMA 9 crossing back above the WMA 45 - and that is where the trade is; a cross that starts inside 40 to 60 has no wave validity and is not a point 4. In a down-wave every one of those mirrors: RSI cuts down through both averages, holds below 20, cuts back up, and rallies above 60 before cutting back down.

Why is point 3 not the place to buy, when it is such a clear signal?

Because at point 3 the market is falling. The down-crossing is the event that ends the impulse and starts the correction, so buying it means buying the first candle of a decline whose depth nobody knows yet. It is tempting precisely because it is clean and visible, while point 4 arrives when the chart looks worst. The cost can be priced exactly on the worked model here. Entering at point 3 puts you in at 66,180 with the stop at the impulse origin of 60,000 and the old high of 70,000 as target: 6,180 of risk for 3,820 of reward, which is 0.62R and needs a 61.8 percent win rate. Waiting for the correction to reach point 4 around two-thirds back puts you in at 63,330: 3,330 of risk for 6,670 of reward, which is 2.00R and needs 33.3 percent. Same scenario, same stop, same target, 28.5 percentage points of difference - and the only thing that changed was not acting on the candle that announced the correction had begun.

What does RSI 40 correspond to in price?

Nothing fixed, and this is the most useful thing on the page. Model an impulse from 60,000 to 70,000 with RSI closing at 80 at the high, which fixes the average candle at 1,190, then run Wilder smoothing forward through corrections that have the same proportion of down closes but different candle sizes. When RSI first touches 40, price has given back 36 percent of the impulse if the correction drifts lower on small candles, 54 percent on medium ones, 83 percent when the correction is as violent as the impulse was, and 107 to 119 percent when it is heavier than that - below where the whole move began. The reason is structural: under equal candles RSI settles at 100 times one minus the share of down closes, and candle size cancels out of that formula completely. RSI measures the proportion of candles going each way, never the distance they covered. That is exactly why this method asks for the agreement of moving averages, RSI and the higher timeframes rather than trusting the oscillator alone.

How deep can the correction go before the scenario is dead?

The correction has to carry RSI under 40 for the point-4 cross to count as a wave at all. Beyond that, the method does not treat depth as killing the scenario - it treats it as downgrading the target. The guidance as taught is that if the correction drives RSI well below 40 in a rising wave and gives back most of the impulse, the completion wave usually comes back weak and only tests the old high instead of breaking it, and the mirror applies well above 60 in a falling wave. So a deep correction changes what you should expect to collect, not whether you have a setup. That downgrade can be priced: a completion that stops at the old high of 70,000 rather than extending 20 percent beyond it takes the two-thirds entry from 2.60R to 2.00R, moving break-even from 27.8 to 33.3 percent, a cost of 5.5 percentage points. Note also that a sideways correction can never print 40 at all, because equal numbers of up and down closes settle RSI at 50 whatever the candles do - so a sideways grind keeps the scenario alive but does not yet give you a point 4.

Where inside the point-4 pullback should the entry actually go?

Point 4 is a zone rather than a line, so the entry has to be priced. Using the identity from the Fibonacci lesson - entry at retracement level f, stop at the impulse origin, target at the prior high - reward-to-risk is f divided by one minus f, and break-even win rate is exactly one minus f. On the worked model that gives 0.62R at the 0.382 level, 1.00R at the classic half-back, 1.62R at 0.618, 2.00R two-thirds back at 63,330, and 3.67R at 0.786. The two-thirds entry is the one worth remembering because it converts the zone into an order: it needs to be right only a third of the time. Deeper entries pay better ratios but run into the depth guidance, since a correction that deep has probably carried RSI through 40 and therefore lowered the target from breaking the high to testing it. The two effects work against each other, which is why the workable zone sits in the middle rather than at the bottom.

Educational content only — not financial advice, and not a trade recommendation. Every figure on this page comes from worked models built for this lesson and each can be reproduced from the numbers given: an impulse from $60,000 to $70,000 with RSI closing at exactly 80 at the high, and entries at $66,180 (0.382), $65,000 (0.5), $63,820 (0.618), $63,330 (0.667) and $62,140 (0.786) against a stop at $60,000 and a target at $70,000. Three identities do the work. First, under the assumption that every candle in the lookback has the same size, RSI = 100 × u ÷ 14 where u is the number of up closes — equivalently RSI = 100 × (1 − p) where p is the share of down closes. This is a translation device, not a measurement, since real candles differ in size and standard RSI uses Wilder’s exponential smoothing; note that candle size cancels from it entirely, which is the basis of the central finding below. Second, that same assumption fixes the average candle at $1,190, since RSI 80 implies 11.2 up and 2.8 down closes and therefore a net travel of 8.4 candle-lengths across a $10,000 impulse. Third, for a retracement entry at level f with the stop at the impulse origin and the target at the prior high, R:R = f ÷ (1 − f) and break-even win rate = 1 − f, carried over from lesson 21. The table of retracement depths at RSI 40 was produced by simulating Wilder smoothing forward from an RSI of 80 with corrections holding a constant 60% share of down closes at each stated candle size, and recording the retracement at the first close where RSI touched 40; the figures are 36%, 54%, 83% and 107% at candle sizes of 0.3×, 0.5×, 1.0× and 1.5× the impulse candle, and 119% for a straight-line flush of same-size down candles. Those depths are sensitive to the modelling assumptions and are quoted to show the range, not to be used as levels. No success rate for completed inertia cycles is quoted anywhere on this page, because the figure taught with the method cannot be reproduced without knowing its exact test design. The indicator settings quoted — RSI 14, EMA 9 and WMA 45, both averages applied to the RSI rather than to price — are the settings taught with this method; they are one school’s choice rather than a standard, and nothing on this page depends on them being optimal. The rules themselves — the four points, the 80 and 20 thresholds, the fast and slow averages placed on RSI, the 40–60 no-opinion band, and the reading of a too-deep correction as a downgrade to a test of the high — follow the course this site learned them from, and are presented as one school’s reading rather than as established fact. Correction, 2 September 2026: an earlier version of this page attributed to that course a two-part invalidation rule requiring RSI below 40 and a close below the 0.5 retracement, and built a table of confirmation lags on it. The course teaches no such rule; the attribution and the arithmetic resting on it have been removed, and the section now covers the depth guidance the course does teach. The same revision corrected the definition of point 4, which had been described as the moment the RSI averages re-open rather than as the up-crossing near 40. Sources: our own arithmetic, stated inline. Published 1 Sep 2026, corrected 2 Sep 2026.