Rank Correlation Index - RCI Indicator for Sierra Chart

The Rank Correlation Index (RCI) is a powerful momentum oscillator that identifies potential market turning points by measuring the correlation between time progression and price movement.

Unlike RSI or Stochastics, which rely on fixed lookback averages, RCI uses rank correlation mathematics to evaluate how "ordered" or "disordered" recent price action has been.

📊 Why Rank Correlation Index Matters

Markets tend to cycle between order (strong uptrends or downtrends) and disorder (choppy, range-bound conditions). Most oscillators fail to capture this subtle distinction.

RCI quantifies whether recent prices have risen or fallen in an orderly fashion, or if the structure has broken down.

This creates a clear, objective tool to spot:

• 🎯 Overbought zones (potential reversal from strength → weakness)
• 🎯 Oversold zones (potential reversal from weakness → strength)
• 🧲 Momentum shifts around the zero line
• 🔐 Confirmation signals when combined with VWAP, Volume Profile and OrderFlow

📐 How It Works

At the core of the calculation is Spearman’s Rank Correlation formula, applied to price data by correlating price ranks with time ranks to detect directional bias.

⚙️ Inputs & Customization

• RCI Period → Length of the lookback window (default: 9)
• Price Input → Base price for calculation (default: Last)
• Overbought / Oversold Levels → Thresholds for signal zones (default: +75 / -75)
• Smoothing → Apply EMA or SMA for a cleaner signal (default: EMA 3)

Fully customizable appearance to match your chart layout.

PS: Depending on your trading timeframe, you may want to slightly adjust these settings.

📌 Ideal Use Cases

• 🧠 Combine with VWAP or Market Profile for context-aware reversals
• 🚦 Use the zero line cross as a momentum shift signal in trends
• 📊 Works on intraday and higher-timeframe charts

🧠 Why Traders Use It

RCI provides a unique lens on order vs disorder in price action, helping traders anticipate exhaustion and turning points more effectively than traditional oscillators.

It is especially useful in:

• Range markets → Fade extremes with confidence
• Trending markets → Stay aligned by filtering false reversals
• High-volatility sessions → Gauge when momentum has peaked

📁 Installation
You’ll receive the file:
RankCorrelationIndex_64.dll

To install:

1. Copy the file into your SierraChart/Data folder
2. Open Sierra Chart → Analysis → Studies
3. Click Add Custom Study
4. Select Rank Correlation Index (RCI) and add it to your chart

📊 Rank correlation mathematics — transform raw price action into actionable momentum signals.