If the silver price moves higher then his 200 day average multiplicated by about 1.3 than backtesting shows that in all likelihood there will be a price pullback. In the "Signal" chart the 1.3 level has a red background.
This signal was quite useful during this silver bull as a sell indicator for short term silverinvestments.
The RMA indicator was developed by Adam Hamilton of Zeal Intelligence as a sell signal for assets, mainly for gold. His implementation was a relative moving day average that divides the current price of an resource by its 200 MA. He backtested a level of 1.3 to be an optimal threshold as sell signal. Roland Watson made some changes to this approach to adapt the RMA to the sometimes wild swings of silver. He called his indicator RMAR.
Our version, the RMA2 is based on the RMA. But as there is now some new data for backtesting, we made some modification to adapt the RMA to the current uptrend of the silver price.
The following articles are a good entry point if you want to learn more about the RMA/RMAR indicator:
Improving Your Silver Exit Strategies by Roland Watson
The RMAR as Exit Signal by Roland Watson
Profitable Exit Strategies for the Silver Bull Market by Roland Watson
