Connors RSI Trading Strategy: Statistics, Facts And Historical Backtests!

Connors RSI including backtest

Often referred to as CRSI, the Connors RSI indicator is a momentum-based oscillator that tries to improve on the original 14-period RSI indicator developed by Welles Wilder. Unlike the original 14-period RSI indicator, the CRSI uses 2 periods as its lookback input parameter and combines the momentum measurement of RSI with components that measure the duration of the trend and the magnitude of the price change to create a more reliable short-term RSI indicator. The CRSI indicator was developed by Larry Connors to create a variation of RSI that would adapt better to short-term changes in the market.

The traditional RSI indicator has been a great tool for technical analysis and trading, but there have been some efforts by traders to improve it. One such improvement gave rise to the Connors RSI, which can be an invaluable tool for traders when applied correctly — not only does it allow you to construct intra-day trading strategies with a high probability of success, but it also reduces your risk potential. But what exactly is the Connors RSI indicator? We explain Connors RSI and compare it to both Welles Wilder’s RSI and Cutler’s RSI. Finally, we make some backtests and potential trading strategies based on the indicator.

What is Connors’ RSI indicator?

The Connors RSI indicator, commonly referred to as CRSI, is a momentum-based oscillator that tries to improve on the traditional 14-period RSI indicator developed by J. Welles Wilder. Developed by Larry Connors, the CRSI was an attempt to create a variation of the original RSI that would adapt better to short-term changes in the market.

Unlike the original 14-period RSI indicator, the CRSI uses 2 periods as its lookback input parameter and combines the momentum measurement of RSI with components that measure the duration of the trend and the magnitude of the price change to create a more reliable short-term RSI indicator. The Connors RSI defines an overbought level that reaches a minimum of 90, or 95 in certain cases.

The Connors RSI indicator is actually a composite of three separate components — The RSI, UpDown Length, and Rate-of-Change — but Wilder’s traditional RSI plays an integral role in the final indicator. In fact, Wilder’s original RSI is used in two of the indicator’s three components.

The three components combine to form a momentum oscillator whose values range between 0 and 100. As with the traditional RSI, it is used to identify short-term overbought and oversold conditions, but unlike the traditional one, it works better in shorter trading timeframes. As a momentum oscillator, it also shows the strength and velocity of price movements.

Since the traditional 14-period RSI indicator developed by Welles Wilder reacts too slowly to be useful for short-term trading, Connors Research sought to improve on it by making the new RSI more suitable for shorter timeframes.

Initially, they devel