Intrady Momentum Index

The Intrady Momentum Index indicator combines the principles of Relative Strength Index (RSI) and candlestick analysis to pinpoint extremes in intraday momentum by evaluating the dominance of bullish or bearish price action.

Usage

The Intraday Momentum Index (IMI) is primarily used to identify overbought and oversold conditions based on the relationship between open and close prices within a lookback period.

• Overbought/Oversold Levels: Traditionally, values above 70 indicate overbought conditions, while values below 20 indicate oversold conditions.
• Volatility Bands: The script includes dynamic bands (similar to Bollinger Bands) applied to the IMI. Crosses outside these bands can signal extreme momentum shifts.
• Trend Shifts: As a market bottoms, IMI values typically rise toward the 70 level as green candles begin to dominate. Conversely, as a market tops, IMI values decline toward 20 as red candles become more frequent.
• Smoothing: Users can toggle Ehlers SuperSmoother to reduce noise and focus on the underlying momentum trend.

Details

Developed by Tushar Chande, the IMI differs from the standard RSI by using the relationship between the intra-bar open and close rather than inter-bar close-to-close changes. It effectively measures the "internal" strength of candles over a specific window. This implementation adds a moving average for trend confirmation and volatility-based bands to adapt to changing market conditions.

Settings

• IMI Length: The lookback period used to calculate the gains and losses from candlestick bodies.
• IMI MA Length: The period for the exponential moving average applied to the IMI line.
• IMI static OB level: The fixed horizontal level representing overbought conditions (default is 70).
• IMI static OS level: The fixed horizontal level representing oversold conditions (default is 20).
• Volatility Bands Stdev Mult: The standard deviation multiplier used to determine the width of the dynamic bands.
• Volatility Bands Length: The lookback period for the volatility band calculations.
• Smooth IMI: A toggle to apply the Ehlers SuperSmoother filter to the raw IMI output.
• Smoothing LowerBand: Controls the cutoff frequency for the SuperSmoother filter.

FAQ

How do I interpret the crosses on the chart?

Green crosses appear when the IMI value exceeds the upper volatility band, indicating strong bullish momentum. Red crosses appear when the IMI falls below the lower volatility band, indicating strong bearish momentum.

What is the difference between IMI and RSI?

While RSI looks at the change between the closing prices of consecutive bars, IMI looks at the relationship between the open and close of the same bar, making it more focused on intraday price action.

How can I access this tool?

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