Laguerre RSI

The Laguerre RSI indicator provides a smoothed version of the Relative Strength Index based on John Ehlers' Laguerre Filter to reduce market noise while minimizing lag. By applying advanced filtering techniques to price data, it helps traders identify cyclical trend changes and momentum shifts more clearly than a standard RSI.

Usage

The Usage section describes how the script can be used, particularly in identifying entry points and trend strength.

• Buy Signals: A common approach is to look for the Laguerre RSI crossing upwards above the 20 level. This suggests that price momentum is recovering from an oversold state.
• Sell Signals: Conversely, a cross downwards below the 80 level indicates a potential bearish reversal or a loss of bullish momentum.
• Trend Strength: Unlike traditional oscillators, the Laguerre RSI often stays flat at the extremes (above 80 or below 20). When the indicator runs flat above 80, it indicates a very strong uptrend. When it remains flat below 20, it suggests a persistent and strong downtrend.
• Neutral State: The 50 level acts as a midpoint for general directional bias, where crosses above or below can signify mid-term momentum shifts.

Details

The Laguerre RSI was developed by John Ehlers and implemented here by Kıvanç Özbilgiç. It utilizes a four-element Laguerre filter (L0, L1, L2, and L3) instead of a simple moving average or exponential smoothing. The alpha coefficient is the primary engine of the script; it determines the damping factor of the filter. By using these Laguerre polynomials, the indicator achieves a much "smoother" look without the significant time lag usually associated with high-period filters. This allows for a more responsive reaction to price action while avoiding the choppy oscillations found in a standard 14-period RSI.

Settings

• Source: Determines the price data used for the calculations (e.g., Close, Open, High, Low).
• Alpha: Controls the smoothing and lag of the indicator. A higher alpha value increases the weight of recent price data, making the indicator more responsive but potentially noisier. A lower alpha value increases smoothness but introduces more lag.
• Change Color?: A visual toggle that changes the color of the plot based on the directional movement of the indicator (rising vs. falling) to help identify immediate momentum changes.

FAQ

How do I adjust the sensitivity of the Laguerre RSI? You can adjust the "Alpha" input in the settings; increasing the value makes the indicator more reactive to price movements, while decreasing it provides a smoother, slower output.

What do the levels 20 and 80 represent? These are threshold levels used to identify oversold (20) and overbought (80) conditions, though they also serve as markers for strong trend continuation when the indicator remains pinned at these extremes.

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