ratio can be obtained in a similar way to .
Ratio (%) = 100 - 100/(1+vr)
The parameter "vr" is defined as
A=Total of the periods when the price advance.
D=Total of the periods when the price declined.
U=Total of the periods when the price unchanged.
After substitution, following expression can be derived and the denominator represents total of all periods.
Ratio (%) = 100 x (A+U/2)/(A+D+U)
A similar method to interpret can be employed.
1) Overbought level over 70% and oversold level under 30%. These levels need to be adjusted according to the periods, time frames and issues.
2) picture over 50% line and picture under 50% line.
3) Crossing oversold level to the upside can be taken as a confirmation of reversal. - and vice versa for a reversal.
4) After a long-term market, the increase of can happen in the early stage of a market.
5) Buying opportunity can be suggested when the ratio is declining and the price is either advancing or leveling off.