RSI & RVI

The RSI & RVI indicator compares relative volatility against relative strength to identify overextended market conditions and fair value zones. By plotting both the Relative Strength Index (RSI) and the Relative Volatility Index (RVI) together, traders can visualize the convergence of momentum and volatility to spot high-probability reversals and trend exhaustions.

Usage

The Usage section focuses on how the interaction between RSI and RVI provides market insights.

• Overbought/Oversold Detection: When both RSI and RVI exceed their respective upper thresholds (RSI > 80 and RVI > 70), green circles appear, signaling an overbought state. Conversely, when both fall below their lower thresholds (RSI < 20 and RVI < 30), red circles signal an oversold state.
• Fair Value Zones: The background highlights in blue when "Fair Value" conditions are met. This occurs when both RSI and RVI are contained within a specific range relative to their moving averages, suggesting a period of equilibrium.
• Put/Call Signals: The script incorporates an external Put/Call Ratio (PCC) check. "CALLS" signals (red dots) and "PUTS" signals (green dots) appear based on specific thresholds of the PCC combined with RSI levels.
• Retracements: Traders can look for "Bear Dips" or "Bull Retraces" based on the internal relationship between current RSI values and the smoothed RSI/RVI averages.

Details

This tool utilizes two core oscillators to provide a multidimensional view of price action:

1. Relative Strength Index (RSI): Measures the speed and change of price movements to identify momentum.
2. Relative Volatility Index (RVI): Similar to RSI but measures the direction of volatility using standard deviation rather than price change directly.

The script further processes these inputs using smoothing functions (SMA) to create dynamic boundaries. It also integrates an external security request for "USI:PCC" to gauge broader market sentiment, which helps filter potential entry or exit points.

Settings

• RSI Length: The lookback period for the RSI calculation (default is 14).
• RSI Overbought/Oversold: Level thresholds for identifying RSI extremes (80/20).
• RVI Length: The lookback period for the standard deviation used in the RVI calculation (default is 14).
• RVI Overbought/Oversold: Level thresholds for identifying RVI extremes (70/30).

FAQ

How do I interpret the colored background?

The blue background indicates a "Fair Value" zone where the relationship between momentum (RSI) and volatility (RVI) is balanced, often preceding a new breakout or trend continuation.

What do the small dots at the bottom represent?

The dots represent Put/Call Ratio signals: red dots suggest potential call opportunities based on sentiment, green dots suggest puts, and light blue dots indicate potential take-profit zones.

How can I access RSI & RVI?

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