Relative Strength Index of Moving Average

The Relative Strength Index of Moving Average indicator calculates the relative strength of moving averages to provide a smoothed oscillator for identifying trend changes and price momentum.

Usage

The Usage section describes how the script can be used to identify market trends and potential reversal points. Users can monitor the interaction between the RSI line and the smoothed moving average (MA) signal line.

• Trend Identification: When the RSI remains above the middle line and the signal line, it suggests a bullish trend. Conversely, RSI remaining below these levels suggests a bearish trend.
• Crossovers: A crossover of the RSI above the MA signal line can be interpreted as a bullish entry signal, while a crossunder may indicate a bearish exit or short entry.
• Overbought/Oversold: The indicator features two tiers of overbought (70/80) and oversold (30/20) levels to identify extreme price extensions.
• Advanced Signal Line: By enabling the advanced signal line, the script creates a percentage-based envelope around the MA. This helps filter out market noise and "fake" signals by requiring price action to clear a specific threshold.

Details

The RSIOMA (Relative Strength Index of Moving Averages) differs from a standard RSI by applying the RSI formula to a smoothed moving average of price rather than the price itself. This approach significantly reduces volatility in the oscillator, making it easier to spot the underlying trend.

The script supports 14 different moving average types for the smoothing process, including advanced filters like the Arnaud Legoux Moving Average (ALMA), Fractal Adaptive Moving Average (FRAMA), and Tillson Moving Average (T3). This allows the tool to be adapted for high-frequency scalping or long-term trend following depending on the selected MA characteristics.

Settings

• Source of RSI: Determines the price data used for the RSI calculation (e.g., Close, Open, High, Low).
• Length of RSI: Sets the lookback period for the RSI calculation.
• First/Second Overbought/Oversold Levels: Configures the horizontal levels for exhaustion zones.
• Middle Line of RSI: Sets the equilibrium level, typically used to determine trend bias.
• RSI of... Moving Average: A dropdown menu to select the type of smoothing (SMA, EMA, WMA, DEMA, TEMA, TRIMA, ALMA, HMA, LSMA, T3, AMA, FRAMA, VIDYA, or SMMA).
• Offset/Sigma of ALMA: Specific tuning parameters for the Arnaud Legoux Moving Average.
• Volume Factor of T3: Controls the damping effect of the T3 moving average.
• Use advanced signal line for RSIOMA?: Enables a visual envelope around the signal line.
• % UP and Down signal line to avoid noise: Sets the width of the advanced signal line envelope.

FAQ

How do I interpret the color changes on the signal line? The signal line changes color based on its slope; a green line indicates the signal line is rising, while a red line indicates it is falling.

Can I change the sensitivity of the trend detection? Yes, by changing the "RSI of... Moving Average" type or adjusting the Length setting, you can make the indicator more reactive to recent price changes or more stable for long-term trends.

How can I access the Relative Strength Index of Moving Average? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.