RSI Candles

The RSI Candles indicator provides a candle-based visualization of the Relative Strength Index (RSI), allowing traders to observe momentum changes through price-action-style bars rather than a single line. This tool aims to improve the clarity of momentum trends and reversals by mapping RSI values into a candle format, making it easier to identify bullish and bearish shifts within the oscillator.

Usage

The RSI Candles indicator can be used as a direct replacement for the standard RSI to better visualize momentum direction. Unlike traditional RSI lines, the candle format highlights the relationship between the current and previous RSI values:

• Bullish Momentum: Candles appear green when the price source is higher than the previous bar.
• Bearish Momentum: Candles appear red when the price source is lower than the previous bar.
• Overbought/Oversold Levels: The indicator includes standard horizontal levels at 70 (Overbought) and 30 (Oversold) to identify potential exhaustion points.
• Inner Bands: Users can enable dynamic or fixed inner bands centered around the 50 level to identify periods of low volatility or sideways momentum.

Details

This implementation focuses on accurate candle mapping. Standard RSI calculations often result in "wicks" that don't align logically with price movement; therefore, this version disables wicks to ensure the body of the candle represents the true momentum delta.

The indicator also offers an optional "Standard RSI" mode. When enabled, it calculates the RSI using a normalized gain/loss ratio. The dynamic inner band feature utilizes either Standard Deviation or a Smoothed Moving Average (RMA) of the RSI changes to define a "noise" zone around the midline.

Settings

• Show Standard RSI: Toggles between a normalized RSI calculation and a standard price-based calculation.
• Show Candles: Enables the candle visualization. If disabled, the indicator displays a standard line.
• Source: The price data used for the RSI calculation (default is Close).
• Length: The lookback period for the RSI calculation (default is 14).
• Inner Band: Choose between "Dynamic", "Fixed", or "Disable" for the central range visualization.
• Dynamic inner band calculation method: Sets the math used for the dynamic band (Standard Deviation or Smoothed Moving Average).
• Inner band width (Sideways band): Adjusts the multiplier for the width of the inner bands.

FAQ

How do I interpret the candle colors? Green candles represent increasing price momentum, while red candles represent decreasing price momentum relative to the previous bar.

What is the purpose of the inner bands? The inner bands help identify "squeeze" zones or sideways markets where the RSI lacks a strong directional trend.

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