Vortex Trend Tracker 2.0 + RSI

The Vortex Trend Tracker 2.0 + RSI indicator provides a comprehensive trend-following solution by combining the directional movement principles of the Vortex Indicator with multi-period Relative Strength Index (RSI) analysis. This tool aims to help traders identify the prevailing market trend and momentum shifts through visual color-coding and histogram analysis.

Usage

The indicator can be used to identify trend direction and strength through several visual cues:

• Histogram: Represents the absolute difference between the smoothed positive (VI+) and negative (VI-) vortex lines. A larger histogram suggests a stronger prevailing trend.
• Color Coding: The histogram and price bars are colored green during bullish regimes (VI+ > VI-) and red during bearish regimes (VI- > VI+). Lighter shades indicate a potential weakening in the trend direction.
• RSI Backgrounds: The indicator incorporates four RSI calculations (two fast and two slow) to create a background cloud effect. When these multiple RSI periods align above or below the 50 level, it provides additional confirmation of trend momentum.
• Crossovers: Traders often look for crossovers between the VI+ and VI- lines as potential signals for trend reversals.

Details

The script calculates the Vortex Indicator (VI) by comparing the distance between current highs and previous lows (positive movement) versus current lows and previous highs (negative movement) over a user-defined length. These values are normalized by the True Range.

In this 2.0 version, the raw VI outputs are smoothed using Exponential Moving Averages (EMA) to filter out market noise. Furthermore, the integration of multi-length RSI values (Fast, Slow, and their halved counterparts) creates a layered momentum filter, allowing users to see if short-term and long-term momentum are in sync with the Vortex-defined trend.

Settings

Vortex

• Length for Vortex: The lookback period used for the standard Vortex calculation.
• Length of Positive and Negative EMA's: The smoothing period applied to the resulting VI+ and VI- lines.
• Color Price Bars Based on Vortex?: Toggles whether the chart bars should be colored according to the trend state.
• Plot VI+ and VI- Lines?: Controls the visibility of the underlying directional movement lines.

RSI

• RSI Source: The price source used for all RSI calculations (e.g., Close, HL2).
• Length of Slow RSI: The primary period for the slow momentum calculation.
• Length of Fast RSI: The primary period for the fast momentum calculation.
• Plot RSI Lines?: Toggles the visibility of the four RSI lines used for the background fills.

FAQ

How do I interpret the lighter colors on the histogram?

Lighter colors indicate that while the trend direction remains the same (e.g., VI+ is still above VI-), the momentum is slowing down because the leading VI line is no longer making new local highs.

What do the background fills represent?

The background fills are generated by the interaction between the four RSI periods. They act as a "momentum cloud" to confirm if price strength is supporting the trend detected by the Vortex lines.

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.