Webby's RSI (Really Simple Indicator)

The Webby's RSI indicator tool measures the percentage difference between the daily low and the 21-day exponential moving average to gauge the health and momentum of an uptrend.

Usage

Webby's RSI (Really Simple Indicator) is primarily used to identify the strength of a bull market, particularly when applied to indices like the Nasdaq Composite (IXIC). High values at the start of a bull cycle indicate significant power and institutional buying.

Traders can interpret the indicator's value based on specific zones:

• 0.5% to 2.0% (Ideal): Indicates a healthy, sustainable uptrend.
• 2.0% to 4.0% (Caution): Suggests the trend is becoming stretched and may require caution.
• 4.0%+ (Warning): Indicates a highly overextended state, signaling a potential pullback or climax.

The indicator also includes a secondary moving average (SMA or EMA) that can be used to identify momentum shifts through crossovers and crossunders.

Details

This implementation is based on the concept created by Mike Webster, a former portfolio manager for William O'Neil. Unlike the traditional Relative Strength Index, Webby's RSI focuses on the relationship between price extremes (the low) and a medium-term trend filter (the 21-day EMA).

The calculation determines how far the current day's low is "stretched" above the 21-day EMA as a percentage of the closing price. This provides a normalized view of price extensions, allowing traders to see when the price is getting too far ahead of its mean.

Settings

Plot

• Plot Style: Choose between Histogram, Line, or Area visualizations.
• Width: Adjusts the thickness of the primary RSI plot.
• Color: Sets the color for the primary RSI data.

Zone Gradient

• Show Zones As Gradient: Enables a visual color transition between the upper and lower bounds.
• Gradient Top/Bottom: Customizes the colors used for the background gradient.
• Hide Zone Lines: Toggles the visibility of the static horizontal threshold lines.

Moving Average

• Visibility: Toggles the secondary moving average on or off.
• Length: Sets the lookback period for the secondary moving average (default is 10).
• Type: Selects between a Simple Moving Average (SMA) or Exponential Moving Average (EMA).
• Color/Width: Customizes the visual appearance of the moving average line.

FAQ

How do I access Webby's RSI?

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

What is the primary use for this indicator?

It is specifically designed to gauge the "power" of an uptrend by measuring how well the price lows are holding up relative to the 21-day EMA.

Why use the day's low instead of the close?

Using the low provides a more conservative measure of trend support, showing whether the absolute floor of the day's trading session is maintaining a healthy distance from the trend line.