Inverse Fisher WMA RSI and ROC of Vortex

The Inverse Fisher WMA RSI and ROC of Vortex indicator combines the Inverse Fisher Transform applied to a Weighted Moving Average (WMA) of the Relative Strength Index (RSI) with the Rate of Change (ROC) of the Vortex Indicator to provide a comprehensive view of trend momentum and overbought/oversold conditions.

Usage

The indicator can be used to identify potential trend reversals and momentum shifts by observing the interactions between the smoothed Vortex ROC lines and the Inverse Fisher RSI.

• Trend Identification: When the ROC of the Positive Vortex (VIP) is greater than the ROC of the Negative Vortex (VIM), it indicates bullish momentum. Conversely, when the ROC VIM is higher, it suggests bearish momentum.
• Overbought/Oversold: The Inverse Fisher RSI (IF RSI) moves between -1 and 1. Values above 0.8 are often considered overbought (colored green), while values below -0.8 are considered oversold (colored red).
• Crossovers: Bullish signals may occur when the ROC VIP crosses above the ROC VIM, especially if the IF RSI is rising from oversold levels.

Details

The script implements several layers of smoothing and transformation:

1. Inverse Fisher RSI: The RSI is first normalized and smoothed using a WMA. The Inverse Fisher Transform is then applied to the result, which helps sharpen the indicator's movements, making it easier to identify clear peaks and troughs.
2. Vortex ROC: The standard Vortex Indicator (VIP and VIM) is calculated, then smoothed with a WMA. Finally, a Rate of Change (ROC) is calculated on these smoothed values to capture the velocity of trend changes rather than just the absolute level.

Settings

• VI Period: Sets the lookback period for the initial Vortex Indicator calculation.
• VI Smoothing Period: Determines the length of the WMA used to smooth the Vortex values and the period for the ROC calculation.
• RSI Main Period: Sets the standard lookback period for the RSI calculation.
• RSI Smooth Period: Determines the length of the WMA applied to the raw RSI before the Inverse Fisher Transform.

FAQ

How do I interpret the colored lines?

The green lines represent bullish momentum in the Vortex ROC or overbought levels in the RSI, while red lines represent bearish momentum or oversold levels. Gray lines indicate neutral or transitioning states.

What is the advantage of using the Inverse Fisher Transform?

The Inverse Fisher Transform is used to make the indicator values spend more time near the extreme ends of the range (1 and -1), providing clearer signals for overbought and oversold conditions compared to a standard RSI.

How can I access Inverse Fisher WMA RSI and ROC of Vortex?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.