Is RCI Below -80 a Buy? 2,484 Backtests on USD/JPY
RCI ranks the last N closes and drops the size of the move. The textbook buy under -80, against the plain change over those closes and four other readings.
RCI stands for Rank Correlation Index and runs from -100 to +100. The reading it is always introduced with is "under -80 is oversold, over +80 is overbought". This is 2,484 runs asking whether that reading makes money.
First, what the indicator is doing. RCI reads only the order of the last N closes and throws the size of the move away. If the last nine closes fell in a straight line, RCI is -100 whether price dropped ten pips or a hundred.
So the control is the thing RCI discards: the percentage change across those same nine closes.
Three results before the detail.
One. Past ±80 is not a rare state. RCI sat at or under -80 on 6.99% to 17.69% of bars and at or over +80 on 9.56% to 31.31%. The 5th percentile of the reading runs from -93.33 to -84.96, so the line spends more time near its ends than near zero.
Two. The textbook fade came last of the five readings. Settings that ended both 2024 and 2025 in profit: 4 of 72 on the 15-minute chart, 3 of 72 on the hourly, 9 of 72 on the 4-hour. Read the same threshold as momentum instead, buying over +80, and those become 39, 33 and 6.
Three. The ranking did not beat the magnitude it replaced. Comparing the bars RCI puts under -80 with the same number of bars taken from the smallest changes, RCI's set won on the next ten bars in 17 of 36 cells.
What RCI measures
RCI builds two rankings over the closes in its window and measures how well they agree.
- Rank by time: number the bars 1, 2, 3 from the oldest.
- Rank by price: number the closes 1, 2, 3 from the lowest.
A straight climb puts the oldest bar at the lowest close, the two rankings agree exactly, and RCI reads +100. A straight fall reverses them and reads -100.
The formula squares the rank differences and sums them. At period 9 a squared-difference sum of 216 lands the reading exactly on -80.
Two consequences follow from that construction.
The size of the move is not in the formula. Only ranks are, so nine bars that fell ten pips and nine bars that fell a hundred read the same if the order was the same.
The reading lands on a lattice. The squared-difference sum is an integer, so RCI at period 9 can only take values 0.833 apart. Across two years of hourly bars (13,482 of them) it took 313 distinct values. Period 52 has a step of 0.004 and took 11,429.
At period 9, the reading was exactly +100 on 51 bars and exactly -100 on 39: nine closes in perfect order, with nowhere further for the line to go. That is 0.67% of bars together. At period 21 and above it never happened.
RCI settings and how they are read
RCI is drawn in a panel under the price chart, scaled -100 to +100. Formiq draws the ±80 lines from the start; MT4 does not, so they have to be added by hand there.
The pane takes one to three lines. The three-line version most RCI material is written around uses a short 9, a mid 26 and a long 52.
| Where | Setting | Default | What it does |
|---|---|---|---|
| Chart | Short period | 9 | How many closes are ranked |
| Chart | Mid period | 0 | 0 draws nothing; 26 adds the second line |
| Chart | Long period | 0 | 0 draws nothing; 52 adds the third line |
| Backtest | Reading | Level extreme | One of the five below |
| Backtest | Period | 9 | How many closes are ranked |
| Backtest | Mid and long | 26 and 52 | Read only by the three-line rule |
| Backtest | Direction | Below | Which side the condition opens |
| Backtest | Level | -80 | The value the rule compares against |
The five readings
| Reading | Buys when | Sells when |
|---|---|---|
| Level extreme (fade) | RCI is under the level | RCI is over the level |
| Level break (follow) | RCI is over the level | RCI is under the level |
| Break out of ±level | RCI crosses up through +level | RCI crosses down through -level |
| Level cross | RCI crosses up through the level | RCI crosses down through the level |
| Three lines aligned | All three are under -level | All three are over +level |
The fade and the follow are the same number read two ways. Each opens one side only, so both were swept as a long rule and a short rule separately. The close is a return through a second level: "buy under -80, close at 0" is the published form.
The remaining three open both sides, so entry and exit share one rule set.
How this was measured
| Item | Value |
|---|---|
| Instrument | USD/JPY |
| Timeframes | 15-minute, 1-hour, 4-hour |
| Period | 1 January 2024 to 31 December 2025, with 2025 also split in halves |
| RCI periods | 9, 14, 21, 26, 36, 52 |
| Fade and follow levels | 70, 80, 90 to open; 0 and 40 to close |
| Break levels | 50, 70, 80, 90 |
| Crossing levels | -80, -40, 0, 40, 80 |
| Three-line sets | 9/26/52, 9/14/21, 14/26/52 at levels 50, 70, 80 |
| Control | The change across the same closes (ROC with a lookback one bar shorter) |
| Runs | 207 settings x 3 timeframes x 4 windows = 2,484 |
| Spread | 0.3 pips, fixed |
| Lot size | 0.1 |
| Fill | Close of the signal bar |
How the control was built. RCI at period 9 reads nine closes, so the move across those same nine closes is the change from the close nine bars back. Formiq's rate-of-change condition at period 8 covers exactly that span. The bars RCI put under -80 were counted, the same number of bars was taken from the small-change end, and both sets were measured to the close ten bars later.
Past ±80 is not a rare state
Before any trading, how often the line reaches the level. Every 2025 bar:
| Timeframe | Period | Bars | At or under -80 | At or over +80 | 5th pct | 95th pct |
|---|---|---|---|---|---|---|
| 15-minute | 9 | 24,893 | 14.96% | 16.47% | -92.08 | 93.33 |
| 15-minute | 26 | 24,893 | 12.45% | 13.62% | -89.81 | 91.25 |
| 15-minute | 52 | 24,893 | 13.02% | 14.91% | -89.49 | 90.95 |
| Hourly | 9 | 6,216 | 15.70% | 16.04% | -93.33 | 93.33 |
| Hourly | 26 | 6,216 | 14.03% | 14.43% | -91.59 | 90.29 |
| Hourly | 52 | 6,216 | 14.56% | 14.54% | -89.70 | 89.39 |
| 4-hour | 9 | 1,600 | 17.69% | 16.88% | -93.33 | 91.67 |
| 4-hour | 26 | 1,600 | 9.94% | 16.25% | -87.97 | 90.97 |
| 4-hour | 52 | 1,600 | 11.25% | 9.56% | -88.73 | 87.07 |
Across all 36 cells of two years, three timeframes and six periods, the reading was at or under -80 on 6.99% to 17.69% of bars and at or over +80 on 9.56% to 31.31%. At period 9 the two sides together cover 31.28% to 34.57% of bars: one bar in three is in an extreme.
The percentiles are worth a second look. In every cell the 5th percentile sits between -93.33 and -84.96 and the 95th between 87.07 and 96.67. The line spends more time near ±90 than near zero, which makes "RCI reached ±80" an ordinary event rather than a signal.
How often the three lines agree
Counting bars where the short 9, mid 26 and long 52 are all outside ±80:
| Timeframe | Short line alone | All three | Share of bars | Share of the short line's |
|---|---|---|---|---|
| 15-minute | 7,824 | 805 | 3.23% | 10.29% |
| Hourly | 1,973 | 122 | 1.96% | 6.18% |
| 4-hour | 553 | 29 | 1.81% | 5.24% |
All three align on 1.81% to 5.14% of bars, and on 5.24% to 14.98% of the bars where the short line alone is outside. The 4-hour chart offers 29 such bars in a year. Any figure from a sample that size needs its trade count read beside it.
What changes when only the order is read
Comparing the bars RCI puts under -80 with the same number taken from the smallest changes over the same closes, measured to the close ten bars later. 2025:
| Timeframe | Period | Correlation | RCI bars | Overlap | RCI mean | Change mean | All bars |
|---|---|---|---|---|---|---|---|
| 15-minute | 9 | 0.756 | 3,723 | 62.56% | +0.59 pips | -0.03 pips | -0.03 pips |
| 15-minute | 26 | 0.773 | 3,100 | 59.61% | -0.18 pips | +1.73 pips | -0.03 pips |
| 15-minute | 52 | 0.785 | 3,242 | 58.95% | -3.17 pips | +0.30 pips | -0.03 pips |
| Hourly | 9 | 0.798 | 976 | 64.65% | -4.91 pips | +0.15 pips | -0.07 pips |
| Hourly | 26 | 0.810 | 872 | 59.40% | +3.42 pips | +7.57 pips | -0.07 pips |
| Hourly | 52 | 0.823 | 905 | 62.98% | +5.29 pips | +5.67 pips | -0.07 pips |
| 4-hour | 9 | 0.828 | 283 | 65.37% | -1.86 pips | +7.05 pips | -0.48 pips |
| 4-hour | 26 | 0.832 | 159 | 50.31% | +12.96 pips | +13.24 pips | -0.48 pips |
| 4-hour | 52 | 0.777 | 180 | 51.11% | +28.25 pips | +9.57 pips | -0.48 pips |
Correlation between RCI and the change runs 0.679 to 0.855. High, and not 1.
The two sets overlap by 50.31% to 70.83%. Three to five bars in ten that RCI calls oversold are not in the set the plain change picks. The ranking really is selecting different bars.
What it is not doing is selecting better ones. Across all 36 cells, RCI's set beat the change's set on pips in 17 and on win rate in 18. Either measure lands where a coin would.
Did the discarded magnitude carry anything
If RCI drops the size of the move, the size might still be informative. Taking only the bars where RCI is at or under -80 and splitting them into quarters by the change over the same nine closes, in 2025:
| Timeframe | Quarter by change | Bars | Change range | Win rate | Mean over 10 bars |
|---|---|---|---|---|---|
| 15-minute | Largest fall | 930 | -1.622% to -0.269% | 52.37% | +0.86 pips |
| 15-minute | Second | 930 | -0.269% to -0.174% | 55.70% | +1.75 pips |
| 15-minute | Third | 930 | -0.174% to -0.110% | 52.37% | -0.74 pips |
| 15-minute | Smallest fall | 933 | -0.110% to -0.007% | 51.98% | +0.51 pips |
| Hourly | Largest fall | 244 | -2.047% to -0.535% | 50.82% | -6.63 pips |
| Hourly | Second | 244 | -0.532% to -0.377% | 48.36% | -4.19 pips |
| Hourly | Third | 244 | -0.377% to -0.250% | 48.36% | -3.01 pips |
| Hourly | Smallest fall | 244 | -0.250% to -0.027% | 46.72% | -5.81 pips |
There is no ordered relationship between the size of the fall and what followed. On the 15-minute chart the second quarter did best at +1.75 pips while the largest falls returned +0.86. All four hourly quarters were negative, the largest falls at -6.63 pips and the smallest at -5.81.
So what RCI discards carried nothing here. What it keeps did not do better than what it discards, either.
Trading all five readings
207 settings, traded. Settings that ended the year with positive pips:
2025
| Reading | Settings | 15-minute | Hourly | 4-hour |
|---|---|---|---|---|
| Level extreme (fade) | 72 | 13 | 34 | 65 |
| Level break (follow) | 72 | 54 | 36 | 7 |
| Break out of ±level | 24 | 18 | 13 | 3 |
| Level cross | 30 | 19 | 21 | 6 |
| Three lines aligned | 9 | 6 | 7 | 6 |
2024
| Reading | Settings | 15-minute | Hourly | 4-hour |
|---|---|---|---|---|
| Level extreme (fade) | 72 | 14 | 9 | 12 |
| Level break (follow) | 72 | 49 | 63 | 59 |
| Break out of ±level | 24 | 18 | 20 | 20 |
| Level cross | 30 | 16 | 22 | 22 |
| Three lines aligned | 9 | 2 | 2 | 2 |
One year at a time, the ordering changes. The fade took 65 of 72 on the 4-hour chart in 2025 and 12 of 72 on the same chart in 2024. The three-line reading had 19 of 27 in profit in 2025 and 6 of 27 in 2024.
Requiring both years narrows it. Settings profitable in 2024 and in 2025:
| Reading | Settings | 15-minute | Hourly | 4-hour |
|---|---|---|---|---|
| Level extreme (fade) | 72 | 4 | 3 | 9 |
| Level break (follow) | 72 | 39 | 33 | 6 |
| Break out of ±level | 24 | 14 | 11 | 1 |
| Level cross | 30 | 12 | 18 | 5 |
| Three lines aligned | 9 | 2 | 2 | 0 |
The textbook fade is the thinnest row on the 15-minute and hourly charts, at 4 and 3 of 72. Reading the same threshold as momentum instead gives 39 and 33.
Splitting 2025 into halves and requiring all four windows narrows it again:
| Reading | Settings | 15-minute | Hourly | 4-hour |
|---|---|---|---|---|
| Level extreme (fade) | 72 | 2 | 0 | 4 |
| Level break (follow) | 72 | 8 | 7 | 1 |
| Break out of ±level | 24 | 11 | 7 | 0 |
| Level cross | 30 | 7 | 8 | 1 |
| Three lines aligned | 9 | 2 | 2 | 0 |
All 72 hourly fade settings lost money in at least one of the four windows.
The textbook buy, period by period
Opening at level 80 and closing on a return to 0, in 2025:
| Timeframe | Side | Period | Trades | Win rate | Annual pips | Bars held |
|---|---|---|---|---|---|---|
| 15-minute | Long | 9 | 750 | 66.13% | +367.4 | 11.2 |
| 15-minute | Long | 14 | 456 | 65.13% | -336.6 | 18.5 |
| 15-minute | Long | 26 | 226 | 65.93% | -426.2 | 35.2 |
| 15-minute | Long | 52 | 116 | 61.21% | -1,074.4 | 78.1 |
| 15-minute | Short | 9 | 753 | 63.08% | -1,194.3 | 13.5 |
| Hourly | Long | 9 | 176 | 64.20% | -652.9 | 13.7 |
| Hourly | Long | 36 | 49 | 67.35% | +322.6 | 50.6 |
| Hourly | Short | 21 | 93 | 66.67% | +358.6 | 28.8 |
| 4-hour | Long | 21 | 18 | 72.22% | +1,150.3 | 28.3 |
| 4-hour | Short | 26 | 23 | 86.96% | +1,396.6 | 28.2 |
| 4-hour | Short | 9 | 53 | 52.83% | -441.0 | 12.6 |
Win rates run 52.83% to 86.96%, and all 36 cells of three timeframes, two sides and six periods cleared 50%. The annual pips column still fills with negative numbers.
The 15-minute long side at period 9 won 66.13% for +367.4 pips; the short side of the same setting won 63.08% for -1,194.3. That is 1,561.7 pips between two sides of one rule. On 15-minute closes USD/JPY rose 1,633.2 pips through 2024 and fell 56.8 pips through 2025, so the long and the short were reading different markets.
The setting closest to the shipped defaults, period 9 at level 80 closing at 0, ranked 179th of 207 by annual pips on the hourly chart's long side in 2025 (176 trades, 64.20%, -652.9 pips), and 185th on the short side in 2024 (200 trades, 55.50%, -1,255.6 pips). This reading sits below the middle in both years.
Three lines worked in 2025 only
All 27 settings of three timeframes, three period sets and three levels, in both years:
| Timeframe | Periods | Level | 2025 trades | 2025 win | 2025 pips | 2024 trades | 2024 win | 2024 pips |
|---|---|---|---|---|---|---|---|---|
| 15-minute | 9/26/52 | 70 | 123 | 61.79% | +865.6 | 121 | 66.94% | +1,638.0 |
| 15-minute | 9/14/21 | 80 | 244 | 64.34% | +2,788.6 | 216 | 57.87% | -2,607.5 |
| Hourly | 9/26/52 | 70 | 35 | 77.14% | +3,340.0 | 22 | 59.09% | +215.5 |
| Hourly | 9/14/21 | 80 | 72 | 66.67% | +1,499.1 | 62 | 66.13% | -1,414.5 |
| Hourly | 14/26/52 | 70 | 39 | 71.79% | +2,476.5 | 20 | 60.00% | -1,612.6 |
| 4-hour | 9/14/21 | 70 | 34 | 79.41% | +3,759.2 | 13 | 30.77% | -3,108.0 |
| 4-hour | 9/14/21 | 80 | 19 | 78.95% | +3,282.0 | 9 | 22.22% | -3,224.6 |
| 4-hour | 9/26/52 | 50 | 15 | 73.33% | +949.1 | 10 | 40.00% | -3,103.7 |
| 4-hour | 14/26/52 | 80 | 2 | 50.00% | -843.2 | 7 | 71.43% | +788.6 |
Four of the 27 ended both years in profit. All nine 4-hour settings lost money in one of the two.
The 4-hour 9/14/21 at level 70 makes it plain. In 2025 it took 34 trades, won 79.41% and made +3,759.2 pips, the best of the 207 settings that year. The same setting in 2024 took 13 trades, won 30.77% and lost 3,108.0 pips, which is 205th of 207. A rule that trades 13 to 34 times a year moves that far between years on its own.
Last year's winner, this year
Taking the setting with the highest annual pips in one year and running it in the other, with its rank among the 207:
| Timeframe | Picked in | Setting | Pips that year | Pips the other year | Rank | Median that year |
|---|---|---|---|---|---|---|
| 15-minute | 2024 | Level cross, period 36, level -40 | +3,805.8 | +996.5 | 24th | +89.1 |
| 15-minute | 2025 | Three lines, 9/14/21, level 80 | +2,788.6 | -2,607.5 | 205th | -81.2 |
| Hourly | 2024 | Level cross, period 21, level -40 | +4,028.1 | +659.6 | 40th | +77.7 |
| Hourly | 2025 | Three lines, 9/26/52, level 70 | +3,340.0 | +215.5 | 105th | +226.3 |
| 4-hour | 2024 | Break out of ±level, period 21, level 80 | +3,652.5 | -3,086.7 | 206th | -265.1 |
| 4-hour | 2025 | Three lines, 9/14/21, level 70 | +3,759.2 | -3,108.0 | 205th | +95.1 |
Three of the six landed 205th or 206th of 207 in the other year. Two beat that year's median, and both are the 2024 picks on the 15-minute and hourly charts.
Those two are the same reading at the same level: a crossing of -40. That is not the ±80 the indicator is introduced with. The only choice that stayed above the median a year later was the one furthest from the textbook.
Related reading
- Is Buying RSI Below 30 Profitable? 330 Settings Tested on USD/JPY: the same fade idea measured on a different oscillator
- Is the CCI ±100 Strategy Profitable? 2,448 Settings Tested: four of these five readings, on CCI
- Is the Psychological Line 75% Rule Profitable? 5,760 Tests: a level that turns out to be unreachable as typed
- Do Trend Filters Remove False Signals? 1,596 Backtests: filters applied across every published setting
Notes on scope
- USD/JPY only, 2024 and 2025, on the 15-minute, 1-hour and 4-hour charts
- Fills at the close, a fixed 0.3 pip spread, 0.1 lots, no slippage
- The three-line reading trades 2 to 45 times a year on the 4-hour chart; win rate and pips from counts that small move a great deal
- The control is a single measure of magnitude, not an inventory of everything the ranking discards
Questions people ask
- What is the best RCI period?
- The period did not settle it here. Taking the textbook fade at level 80 with a give-back at 0, the 15-minute long side is profitable at period 9 only (750 trades, 66.13% win rate, +367.4 pips) and negative at 14 through 52. The hourly long side is profitable at 36 and 52 only. On the 4-hour chart all six periods ended positive. Change the timeframe and the answer changes with it.
- Do three RCI lines beat one?
- In 2025 they look better: 19 of 27 settings positive, and the 4-hour 9/14/21 at level 70 won 79.41% of 34 trades for +3,759.2 pips. The same setting in 2024 won 30.77% of 13 trades for -3,108 pips, which ranks 205th of 207. Four of the 27 cleared both years and none of the nine 4-hour settings did.
- How unusual is RCI under -80?
- Not unusual. At period 9 it happens on 11.70% to 17.69% of bars. The 5th percentile of the reading runs from -93.33 to -84.96 and the 95th from 87.07 to 96.67, so the line spends more time near its ends than near zero.
- How is RCI different from the plain change?
- RCI reads only the order of the closes and drops how far price moved. Its correlation with the change over the same closes runs 0.679 to 0.855, and of the bars RCI calls oversold, 50.31% to 70.83% are also in the same-sized set of smallest changes. So it does pick different bars. Those bars did not do better, though: over the next ten bars RCI's set won 17 of 36 cells.
- Can I test RCI in Formiq?
- Yes. Enable RCI in the condition list and the reading picker offers all five. The chart pane now takes a period as well, and setting the mid and long periods to anything but 0 draws the three-line version. All 2,484 runs here were built that way.
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