Smooth RSI

The Smooth RSI indicator provides a refined view of market momentum by averaging Relative Strength Index (RSI) values across multiple price points and integrating a Rate of Change (RoC) filter for trend confirmation. This script aims to reduce the noise typically found in standard single-price RSI oscillators, offering a more stable signal for identifying bullish and bearish regimes.

Usage

The indicator can be used to identify trend direction and momentum exhaustion. The primary signals are derived from the relationship between the averaged RSI and the 50 level, combined with the RoC direction.

• Bullish Bias: When the average RSI is above 50 and the RoC is positive, the chart bars turn green, suggesting a bullish trend.
• Bearish Bias: When the average RSI is below 50 and the RoC is negative, the chart bars turn red, suggesting a bearish trend.
• Overbought/Oversold: Horizontal levels at 70 and 30 provide classic areas for potential exhaustion, though the averaged nature of the calculation often results in smoother transitions through these zones.

The script also features a toggleable RSI candle plot, which allows users to visualize the internal "price action" of the RSI itself, and an optional RoC plot to see the underlying trend confirmation strength.

Details

The Smooth RSI differs from standard RSI implementations by calculating the RSI for the High, Open, Low, and Close of every bar individually. These four values are then averaged to produce a single "Smooth RSI" value. This method accounts for the full price range of the candle rather than just the closing price, leading to a more comprehensive momentum reading.

The trend confirmation component uses a similarly averaged Rate of Change (RoC). The script calculates the RoC for all four price points and averages them. This RoC value acts as a secondary filter: for a bullish signal to trigger, momentum (RSI) must be positive and the rate of price change (RoC) must also be positive.

Settings

• RSI Length: Adjusts the lookback period for the RSI calculations. Higher values result in a smoother, slower indicator.
• RoC Length: Sets the lookback period for the Rate of Change calculation used for trend validation.
• Show RSI: Toggles the visibility of the RSI candle plot in the indicator pane.
• Show RoC: Toggles the visibility of the RoC line and its associated background fill.

FAQ

How do I access Smooth RSI?

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

What is the advantage of using four price points instead of just the close?

Using Open, High, Low, and Close provides a more holistic view of the bar's momentum. It prevents the indicator from being overly sensitive to "pins" or late-bar price spikes that only affect the closing price.

Can I use this for scalping?

Yes, by lowering the RSI and RoC length settings, the indicator becomes more reactive to short-term price movements, though this may increase the frequency of false signals.