Hull Moving Average Adaptive RSI (Ehlers)

The Hull Moving Average Adaptive RSI (Ehlers) indicator provides a smoothed trend-following line that dynamically changes color based on volatility-adjusted momentum to identify trend exhaustion and reversals with minimal lag.

Usage

The Usage section describes how the script can be used to identify trend direction and momentum shifts simultaneously. The indicator is designed to be used as a primary trend filter on timeframes ranging from 1 hour to 1 day.

• Trend Identification: The direction and slope of the Hull Moving Average (HMA) line indicate the primary market trend. Traders look for the price to remain above or below the line to confirm trend persistence.
• Momentum Analysis: The color of the HMA line is driven by the Adaptive RSI. This allows traders to see the internal strength of a trend without adding an extra oscillator to their sub-charts.
• Spotting Reversals: A shift from red shades to blue/green shades suggests that bearish momentum is exhausting and a recovery may be starting. Conversely, a shift from bright green to red suggests bullish exhaustion.
• Consolidation Detection: When the line turns gray, the Adaptive RSI is near the 50-level, indicating a balanced market or consolidation phase where neither buyers nor sellers have control.

Details

The indicator combines the lag-reducing properties of Alan Hull's Moving Average with the dynamic sensitivity of John Ehlers' adaptive concepts.

• Hull Moving Average (HMA): The HMA uses a combination of Weighted Moving Averages (WMA) to eliminate lag while maintaining smoothness. It calculates the difference between two WMAs of different periods and then applies a third WMA to the result.
• Adaptive RSI: Unlike a standard RSI with a fixed lookback, the Adaptive RSI calculates an "instantaneous period" based on market volatility and ATR. This value determines the RSI length dynamically.
• Color Mapping: The script normalizes the Adaptive RSI output and maps it to a gradient. Values significantly above 50 transition toward red (representing overextended bullish momentum or exhaustion), while values significantly below 50 transition toward blue/green (representing oversold conditions or recovering momentum).

Settings

• Source: The price data used for the HMA and RSI calculations (default is Close).
• HMA Length: Sets the lookback period for the Hull Moving Average calculation. Higher values increase smoothness but increase lag, while lower values are more responsive to price action.

FAQ

Which markets is this indicator best suited for? The indicator is highly effective in markets with frequent momentum shifts, such as indices, stocks, forex, and cryptocurrencies.

How does the Adaptive RSI differ from a standard RSI? The Adaptive RSI dynamically adjusts its calculation period based on current market volatility, whereas a standard RSI uses a fixed lookback period (typically 14).

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