Donchian Range, RSI, and Levels System

The Donchian Range, RSI, and Levels System indicator provides a comprehensive visualization of market trend and support/resistance zones by utilizing a ribbon of Donchian Moving Averages combined with RSI-based coloring. It aims to identify natural price clusters where multiple Donchian lengths converge, signaling potential areas of market interest or trend exhaustion.

Usage

The indicator can be used to identify trend direction and volatility ranges. The primary component is the Donchian Ribbon, which plots multiple Donchian averages simultaneously. When these lines cluster together, they often form significant support or resistance levels.

Users can also enable the Donchian Channel to define the overall price range over a specific period. The optional "RSI Rainbow" feature provides a color-coded gradient based on the Relative Strength Index of each average, allowing traders to quickly gauge overbought or oversold conditions across various time horizons directly on the price chart.

Details

A Donchian average is calculated as the midpoint between the highest high and the lowest low for a given lookback period: (highest + lowest) / 2. By plotting 21 different lengths of these averages (ranging from 2 to 22 by default), the script creates a "ribbon" effect.

The implementation uses an RSI-based color gradient (Rainbow) that maps RSI values to a specific color array. This allows the ribbon to change color dynamically based on momentum:

• High RSI values shift the ribbon toward the cooler end of the spectrum (e.g., cyan/blue).
• Low RSI values shift the ribbon toward the warmer end (e.g., red/purple).
• The "RSI Rainbow" can be applied both to the ribbon averages and the main Donchian Channel fill.

Settings

Donchian Channel

• Donchian Channel on?: Toggles the visibility of the primary outer Donchian Channel.
• Length: Sets the lookback period for the main Donchian Channel.
• RSI Rainbow?: When enabled, the channel fill color is determined by the RSI of the channel's midpoint.
• Channel Fill Transparency: Adjusts the opacity of the main channel background.

Donchian Moving Average Ribbon

• Donchian Ribbon on?: Toggles the visibility of the 21 individual Donchian averages.
• RSI Rainbow?: When enabled, each line in the ribbon is colored based on its own RSI value.
• Ribbon Transparency: Controls the opacity of the ribbon lines.

Ribbon Lengths

• Length 2 - 22: Allows for the individual adjustment of the lookback periods for each of the 21 lines in the ribbon.

FAQ

How do I interpret the clustering of lines?

When the multiple Donchian average lines converge into a tight band, it indicates a period of price consolidation or a significant level of support/resistance. A fan-out of the lines typically suggests a strong trending environment.

What does the "RSI Rainbow" indicate?

The colors represent the momentum of each specific average. Rapid color shifts can signal a change in trend strength or potential mean reversion points when the colors reach extreme ends of the gradient.

How can I access Donchian Range, RSI, and Levels System?

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