Stochastic RSI+ Support/Resistance (beta)

The Stochastic RSI+ Support/Resistance (beta) indicator automatically identifies dynamic price levels by leveraging overbought and oversold conditions determined by a Stochastic RSI calculation.

Usage

The indicator displays two primary lines on the chart: a resistance level (red) and a support level (green). These levels are updated based on the relationship between price action and the Stochastic RSI oscillator.

• Support Identification: When the smoothed %D line falls below the lower band (default 20), the script tracks the recent lows. A support level is established or adjusted when the %K line crosses above the %D line and exceeds a specific reversal threshold.
• Resistance Identification: When the smoothed %D line rises above the upper band (default 80), the script tracks recent highs. A resistance level is established or adjusted when the %K line crosses below the %D line and drops below a specific reversal threshold.
• Breakouts: Traders can monitor price action relative to these lines. A breakout occurs when the price closes above resistance or below support, often signaling a shift in market structure or momentum.

Details

This script enhances the standard Stochastic RSI by adding smoothing options and logic to translate oscillator extremes into price-overlay levels. The implementation uses a multi-state logic system to track price peaks and troughs during overextended periods.

Key calculation components include:

• RSI: Calculates the Relative Strength Index over a specified length.
• Stochastic RSI: Applies the Stochastic formula to the RSI values.
• Smoothing (K & D): The raw Stochastic RSI values are smoothed using various selectable moving averages (SMA, EMA, WMA, VWMA, or VAWMA) to reduce noise.

Settings

Main Settings

• K Mode: Selects the moving average type used to smooth the %K line (SMA, EMA, WMA, VWMA, VAWMA).
• Source: The price source used for the RSI calculation.
• K: The period used for smoothing the %K line.
• D: The period used for smoothing the %D line.

Lengths

• RSI: The lookback period for the RSI calculation.
• Stochastic: The lookback period for the Stochastic calculation applied to the RSI.

Band

• Lower: Sets the threshold for oversold conditions.
• Upper: Sets the threshold for overbought conditions.

Reversal

• Lower: The specific level the %K must break upward to confirm a reversal from an oversold state.
• Upper: The specific level the %K must break downward to confirm a reversal from an overbought state.

FAQ

How can I use this to find entry points?

Traders often look for price breakouts above the red resistance line for potential long entries or breakdowns below the green support line for potential short entries, especially when confirmed by momentum.

What is VAWMA?

VAWMA stands for Volume-Adjusted Weighted Moving Average, which incorporates trading volume into the smoothing process to give more weight to high-volume price movements.

How do I access this indicator?

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