Price Relativity Indicator

The PRI — Price Relativity Indicator — has three core elements, and the logic behind them is price propagation.

1. Price relative to its moving averages

This asks:

Is price above or below its key moving averages?

Simple definition:

Price above the moving averages = bullish evidence.Price below the moving averages = bearish evidence.

Logic:

Price moves first. It is the first signal that something may be changing. But by itself, price can be noisy.

2. Moving averages relative to each other

This asks:

Is the shorter moving average above or below the longer moving average?

Simple definition:

Shorter MA above longer MA = bullish structure.Shorter MA below longer MA = bearish structure.

Logic:

This shows that the price move has begun to propagate through time. The short-term trend has become strong enough to alter the relationship with the longer-term trend. This is where the market starts moving from event to structure.

3. Slope of the moving averages

This asks:

Are the moving averages rising, falling, or flat?

Simple definition:

Rising slopes = bullish confirmation.Falling slopes = bearish confirmation.Flat slopes = weaker or uncertain signal.

Logic:

Slope tells us whether the trend has directional force. This is the key PRI refinement. A cross by itself may be mechanical or weak. But when the moving averages are sloping in the direction of the cross, it shows that the price move has been absorbed, repeated, and accepted enough to create a sustained trend condition.

In sum:

PRI works because price information takes time to propagate through the investment community. As more investors recognize and act on the move, price behavior becomes embedded in the moving averages. When price position, moving-average alignment, and slope all confirm one another, the move has shifted from a temporary price event into a more durable market condition.

While PRI has demonstrated predictive value, it is not flawless. False signals can occur. When the signal is false, that propagation fails; the market does not continue to reorganize around the new direction, and the prior trend typically reasserts itself within 60 days. This gives PRI not only directional value, but also risk-management value: when a signal fails, the failure tends to reveal itself within a defined time window.