RSI+ with Bollinger Bands

The RSI+ with Bollinger Bands indicator provides a comprehensive momentum analysis tool by applying Bollinger Bands directly onto the Relative Strength Index (RSI) to identify potential reversals and price extremes. By wrapping the RSI in volatility bands, the script highlights anomalous price movements when the RSI exits the established standard deviation range, suggesting high-probability exhaustion points.

Usage

The script is primarily used to identify market extremes and potential trend reversals. When the RSI line crosses outside the upper or lower Bollinger Bands, it indicates that the momentum has reached an atypical level relative to its recent average.

• Reversal Identification: Look for the RSI line to exit the Bollinger Bands and then return inside them as a sign of weakening momentum.
• Volatility Analysis: The width of the bands adjusts based on market volatility; narrower bands suggest consolidation, while wider bands suggest high-velocity price action.
• Pivot Detection: The indicator includes built-in pivot point markers (circles) on the RSI line to help visualize local highs and lows within the momentum oscillator.
• Multi-Timeframe Application: Users are encouraged to observe these RSI/BB interactions across various timeframes to confirm signals and find confluence.

Details

This tool calculates a standard RSI and then applies a Moving Average (SMA, EMA, WMA, or RMA) as a basis for Bollinger Bands. Unlike standard price-based Bollinger Bands, these bands are calculated based on the standard deviation of the RSI values themselves. This method filters out "normal" momentum fluctuations and highlights moves that are statistically significant (e.g., using a 2.33 StdDev covers approximately 98% of price action data).

Settings

RSI Settings

• RSI Length: Determines the lookback period for the RSI calculation.
• RSI Source: Sets the price data used for the RSI calculation (default is Close).
• RSI recolor: Enables or disables the changing of the RSI color when it breaks outside the bands.
• RSI Pivots search: Toggles the visibility of pivot high and low markers on the RSI.
• Depth of search H/L: Adjusts the sensitivity for detecting RSI pivot highs and lows.

Bollinger Bands Settings

• Show BB: Toggles the visibility of the upper and lower Bollinger Bands.
• Show BB Width: Displays the width of the bands as a separate plot.
• Show BB SMA: Toggles the visibility of the central Moving Average (basis) line.
• BB Length: The period used to calculate the basis and standard deviation.
• BB StdDev: The multiplier for the standard deviation (set to 2.33 by default for higher probability).
• BB Basis Type: Choose between SMA, RMA, EMA, or WMA for the band calculation.

FAQ

How do I use the RSI+ with Bollinger Bands?

The script is used to find overextended market conditions. When the RSI line exceeds the Bollinger Bands, it signals an "extreme" momentum state that often precedes a mean reversion or trend change.

What does the RSI recoloring mean?

When enabled, the RSI line changes color (typically to red) when it trades outside the Bollinger Bands, making it easier to spot anomalous momentum spikes at a glance.

How can I access RSI+ with Bollinger Bands?

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