RSI Bollinger Bands - Levels

The RSI Bollinger Bands - Levels indicator identifies potential trend reversals by monitoring when the Relative Strength Index (RSI) interacts with Bollinger Bands applied directly to the RSI values.

Usage

The indicator is designed to highlight mean-reversion opportunities within the RSI's own volatility range.

• Long Signals: These occur when the RSI crosses above its lower Bollinger Band. This signal is further filtered to only trigger if the lower Bollinger Band is currently below the RSI Oversold Threshold (e.g., 30).
• Short Signals: These occur when the RSI crosses below its upper Bollinger Band. This signal is only triggered if the upper Bollinger Band is currently above the RSI Overbought Threshold (e.g., 70).

When a signal is generated, the chart background is highlighted (green for long, red for short). Because these signals can occur during strong trends, it is recommended to use this tool in conjunction with volume or trend oscillators like MFI (Money Flow Index) or VFI (Volume Flow Indicator) to confirm momentum.

Details

Unlike standard Bollinger Bands that are applied to price, this script applies the Bollinger Band calculation to the RSI line itself. This creates dynamic overbought and oversold levels that expand and contract based on the recent volatility of the RSI.

The implementation includes a secondary RSI Moving Average (MA) and static horizontal thresholds (Oversold/Overbought). The signal logic requires both a "cross" event and a "level" condition, ensuring that the RSI is in a historically stretched area before a signal is plotted.

Settings

• RSI Source: Determines the price data used to calculate the RSI.
• RSI Length: The lookback period for the RSI calculation.
• RSI Oversold Threshold: The static level used to qualify long signals (lower BB must be below this).
• RSI Overbought Threshold: The static level used to qualify short signals (upper BB must be above this).
• RSI MA Length: The period for the optional RSI Moving Average line.
• BB Length: The lookback period for the Bollinger Bands calculated on the RSI.
• BB StdDev: The multiplier for the Standard Deviation, determining the width of the Bollinger Bands.

FAQ

How do I interpret the background highlights?

A green background indicates the RSI has recovered from a dynamic lower bound, suggesting a potential long entry. A red background indicates the RSI has pulled back from a dynamic upper bound, suggesting a potential short entry.

Can I change the sensitivity of the signals?

Yes, by adjusting the BB StdDev or the BB Length, you can make the bands wider (fewer signals) or narrower (more signals). Adjusting the static RSI thresholds will also filter out signals that occur in neutral territory.

How can I access RSI Bollinger Bands - Levels?

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