RSI MA Cross + Divergence Signal (V2)

The RSI MA Cross + Divergence Signal (V2) indicator identifies high-probability reversal points by combining Relative Strength Index (RSI) momentum, moving average crossovers, and price-to-momentum divergences.

Usage

The indicator is primarily used to spot trend reversals or exhaustion points in "stretched" market conditions. Users can monitor the following primary signals:

• Bullish Reversal: Occurs when the price makes a lower low while the RSI makes a higher low (Bullish Divergence), coinciding with the RSI crossing above its Moving Average.
• Bearish Reversal: Occurs when the price makes a higher high while the RSI makes a lower high (Bearish Divergence), coinciding with the RSI crossing below its Moving Average.

The tool is most effective when used on higher timeframes (15m to 4H) to filter out noise. Traders often look for these signals at key technical levels such as Fair Value Gaps (FVG), Volume Weighted Average Price (VWAP), or significant support and resistance zones.

Details

The script integrates three layers of confirmation to ensure signal quality:

1. Momentum Tracking: Uses a standard RSI to track price velocity.
2. Trend Smoothing: Applies a Moving Average (SMA, EMA, or WMA) directly to the RSI values to define momentum direction.
3. Divergence Logic: Utilizes pivot-based detection to find discrepancies between price action and momentum, which often precede significant reversals.

By requiring both a divergence and an MA cross, the script avoids many false signals typical of oscillators in trending markets.

Settings

• RSI Length: The lookback period used for the RSI calculation (default: 14).
• RSI MA Length: The period for the Moving Average applied to the RSI (default: 9).
• MA Type: Choose between Simple (SMA), Exponential (EMA), or Weighted (WMA) moving averages.
• RSI Source: The price source used for calculations (default: close).
• Divergence Lookback: Determines the sensitivity of the pivot detection for identifying divergences.
• Only signal on bar close: When enabled, signals will only appear once the current candle has finished, preventing repainting.

FAQ

How do I access the RSI MA Cross + Divergence Signal (V2)?

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

Can I use this for scalping?

While it can be used on lower timeframes, divergences are often more reliable on 15-minute charts and above. Lower timeframes may produce more false signals during high-volatility news events.

Does the indicator repaint?

If "Only signal on bar close" is enabled, the signals will wait for the bar to confirm, ensuring the divergence and cross are locked in before appearing.