Standard Deviation SMA RSI

The Standard Deviation SMA RSI indicator provides a comprehensive framework for trend identification and volatility analysis by applying RSI calculations to a smoothed Simple Moving Average (SMA). This approach filters out market noise and uses dynamic standard deviation bands to help swing traders and long-term investors capture high-probability trend shifts and mean reversion opportunities.

Usage

The tool is primarily used to identify sustained market trends and potential overextended conditions. It is optimized for higher timeframes (12-hour, Daily, Weekly) rather than low-timeframe scalping.

• Trend Identification: The RSI line changes color based on trend conditions. Green indicates a strong uptrend above the defined threshold, while pink (red) indicates a bearish trend below the lower threshold.
• Volatility Analysis: The standard deviation bands surrounding the price help identify volatility expansion and contraction.
• Entry Signals: Bullish signals occur when the smoothed RSI crosses above the upper threshold without price being below the lower volatility band. Bearish signals occur when the RSI falls below the short threshold.
• Price Correlation: The indicator includes bar-coloring features to visually align price action with the calculated trend state.

Details

The script operates by first calculating an SMA of the input source. This smoothed value is then used as the basis for the RSI calculation, effectively lagging the oscillator slightly but significantly reducing false signals (whipsaws). Standard deviation is calculated over a user-defined period to establish dynamic bands around the SMA, providing a volatility-adjusted context for price action.

Settings

SMA RSI Inputs

• SMA Length: Determines the lookback period for the initial SMA smoothing.
• Source: Defines the price data used for calculations (default is Close).
• Standard Deviation Length: Sets the period for calculating the volatility bands.
• RSI Length: Controls the number of periods for the Relative Strength Index calculation applied to the SMA.

Threshold

• Threshold Uptrend: The level above which the RSI must cross to signal a bullish trend.
• Threshold Downtrend: The level below which the RSI must cross to signal a bearish trend.

Style

• Uptrend Color: Customizes the color used for bullish signals and RSI lines.
• Downtrend Color: Customizes the color used for bearish signals and RSI lines.
• Threshold Color: Sets the color for the horizontal threshold reference lines.

FAQ

How do I use the trend signals?

Signals are triggered when the smoothed RSI crosses specific thresholds. A triangle up indicates a transition into a bullish trend, while a triangle down indicates a transition into a bearish trend.

What timeframes are best for this tool?

This indicator is designed for higher timeframes like the 12H, Daily, or Weekly charts to maximize the effectiveness of the SMA smoothing and RSI filtering.

How can I access this script?

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