RSI - Div - TDI

The RSI - Div - TDI indicator is a comprehensive momentum tool that combines the Relative Strength Index (RSI) with Bollinger Bands and divergence detection to identify overextended market conditions and potential trend reversals. It enhances the classic Traders Dynamic Index (TDI) framework by incorporating "Sharkfin" patterns and automated bullish/bearish divergence labels.

Usage

The tool is designed to identify high-probability reversal zones. Users can monitor the interaction between the RSI line and the integrated Bollinger Bands:

• Sharkfins: These occur when the RSI moves sharply outside of the Bollinger Bands and beyond the 75 (overbought) or 25 (oversold) thresholds. A "Strong" sharkfin appears when both conditions are met, while a "Weak" sharkfin appears if the RSI breaks the bands but remains within the standard extremes.
• Divergences: The indicator can plot labels when price makes a higher high but the RSI makes a lower high (Bearish), or when price makes a lower low but the RSI makes a higher low (Bullish).
• RSI Interaction: Two RSI lines are provided (standard and fast) to help visualize momentum shifts within the volatility bands.

Details

The indicator calculates a primary RSI (default length 14) and a secondary fast RSI (default length 7). The volatility envelope (Bollinger Bands) is applied directly to the primary RSI rather than the price. This implementation offers flexibility in the Band calculation, allowing users to choose between various moving average types including EMA, SMA, DEMA, TEMA, and KAMA. The divergence logic evaluates price action against RSI peaks and troughs over a user-defined lookback period to highlight discrepancies in momentum.

Settings

RSI Settings

• RSI Length: Period for the primary RSI calculation.
• RSI Length 2: Period for the secondary, faster RSI line.
• RSI Overbought/Oversold: Level thresholds for sharkfin detection (default 75/25).
• RSI Source: The price source used for the RSI calculation.

Bollinger Bands (TDI) Settings

• BB Length: The period used for the volatility bands.
• BB Type: Choose the smoothing method (SMA, EMA, WMA, DEMA, TEMA, TRIMA, KAMA, or T3).
• BB std.: The standard deviation multiplier for the band width.

Visuals & Logic

• Show Sharkfins?: Toggles the triangle shapes for overextended RSI breaks.
• Show Divergences?: Enables the detection and labeling of bullish/bearish divergences.
• Hide pivots?: Removes the pivot point markers used for divergence calculations.
• Shorter labels?: Minimizes divergence text to simple circles for a cleaner interface.
• Div lookback period (bars)?: The window used to scan for price and RSI highs/lows.

FAQ

How do I use the RSI - Div - TDI?

The indicator is best used to find mean-reversion opportunities. Look for "Sharkfin" shapes appearing outside the blue volatility bands combined with divergence labels for confirmation.

What are Sharkfins?

Sharkfins are specific patterns where the RSI "pokes" out of the Bollinger Bands and quickly snaps back, resembling a fin. This often indicates a temporary exhaustion in momentum.

How can I access RSI - Div - TDI?

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