RSI OverBought/Sold Price Predict

The RSI OverBought/Sold Price Predict indicator calculates and projects the specific price levels required for the Relative Strength Index (RSI) to reach key overbought, oversold, or neutral thresholds in the subsequent bar.

Usage

The indicator can be used to anticipate potential market reversals or trend continuations by visualizing RSI thresholds directly on the price chart. Traders can use these projected levels as dynamic support and resistance zones.

• RSI 50 Level (White Line): Represents the price target for the RSI to reach a neutral 50 value, often used to identify the balance point of a trend.
• OB/S Level 1 (Orange Lines): Projects the price needed to hit the primary overbought (default 70) or oversold (default 30) levels.
• OB/S Level 2 (Yellow Lines): Projects the price needed to hit secondary levels (default 80/20).
• OB/S Level 3 (Green Lines): Projects the price needed to hit extreme levels (default 90/10).

The Smoothing option is particularly useful for identifying long-term support and resistance by filtering out minor price fluctuations from the projections.

Details

This tool reverse-engineers the standard RSI formula. Instead of calculating the RSI value based on price change, it calculates the price change required to result in a specific RSI output. It utilizes the Relative Moving Average (RMA) logic inherent in the RSI calculation to provide an accurate one-bar-ahead prediction.

Settings

• Length: The lookback period for the RSI calculation (default is 14).
• Source: The price data used for calculation (default is close).
• RSI 50 Line: Toggles the visibility of the neutral RSI 50 price projection.
• RSI OB/S 1/2/3 Line On/Off: Toggles the visibility of the primary, secondary, and tertiary overbought/oversold price levels.
• OverBought 1/2/3: Sets the specific RSI upper threshold values for the projections.
• OverSold 1/2/3: Sets the specific RSI lower threshold values for the projections.
• Smoothing: Applies a Simple Moving Average (SMA) to the predicted levels to create smoother lines.

FAQ

How do I interpret the projected lines? The lines indicate the exact price the current candle would need to reach for the RSI to hit the designated level at the close of the bar.

Can I use this for identifying support and resistance? Yes, by enabling the "Smoothing" option, the levels act more like traditional dynamic support and resistance zones based on RSI exhaustion points.

How can I access the RSI OverBought/Sold Price Predict? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.