In this article RSI formula is given as follows:
RSI = 100 - 100/(1 + RS) where RS = (average gain)/(average loss)
First Average Gain = Sum of Gains over the past 14 periods / 14
First Average Loss = Sum of Losses over the past 14 periods / 14
(rest of) Average Gain = [(previous Average Gain) x 13 + current Gain] / 14
(rest of) Average Loss = [(previous Average Loss) x 13 + current Loss] / 14
Here, average gain and loss are defined as average of previous 14 values for the first term, and defined using previous average value for the rest of terms. The author of the article called it (taking the previous value for calculating current value) ‘smoothing technic’.
My question is that why we don’t just use simple moving average for all terms? What’s the purpose or effect of using previous average as an input of calculation of current value? (It seems the ‘smoothing technic’ makes RSI less sensitive to input values, but I don’t know why)