Adaptive RSI

The Adaptive RSI indicator is a self-calibrating momentum oscillator that identifies overbought and oversold conditions through historical percentile analysis rather than fixed numerical levels. By constructing dynamic threshold boundaries that adjust to evolving market volatility, it provides a context-aware framework for evaluating momentum strength and exhaustion.

Usage

The indicator can be used to identify market regimes, trend strength, and potential reversals through its adaptive logic.

• Regime Identification: A Bullish Regime (Blue) is activated when the oscillator crosses above the upper percentile threshold, while a Bearish Regime (Red) is established when it crosses below the lower threshold.
• Divergence Trading: Use the regular bullish and bearish divergence signals (plotted on both the price chart and the oscillator) to identify potential momentum exhaustion before price reversals occur.
• Volatility Adapting: During low-volatility consolidation, the thresholds tighten, whereas they widen during trending environments to prevent premature signals common in traditional RSI implementations.
• Exhaustion Markers: Diamond symbols (✦) appear at extreme levels (above 80 or below 15) to mark potential reversal zones independent of the current regime.

Details

Unlike standard RSI which uses static 70/30 levels, this tool uses a rolling historical buffer of confirmed oscillator values to calculate dynamic percentiles. The calculation engine involves:

• Pre-Smoothing: The price source is processed via a 4-period Hull Moving Average (HMA) to reduce noise.
• Post-Smoothing: Users can apply various Moving Average types (SMA, EMA, HMA, etc.) to the resulting RSI for cleaner regime detection.
• State Persistence: The regime state remains active until an opposing threshold breach occurs, helping filter out whipsaws during range-bound conditions.
• Divergence Engine: Synchronized pivot analysis of price and oscillator values identifies regular divergences within configurable bar ranges.

Settings

Core Calculation

• RSI Length: The lookback period for the base RSI calculation.
• Source: The price input used for the calculation.
• Smooth Oscillator: Toggles post-calculation smoothing.
• Smoothing Length/Type: Defines the period and moving average method (SMA, EMA, HMA, WMA, DEMA, RMA, LINREG, TEMA) for smoothing.

Adaptive Thresholds

• Adaptive Lookback: The number of historical bars used to calculate the distribution for percentile thresholds.
• Upper/Lower Percentile: Defines the specific percentile values that trigger bullish or bearish regime shifts.

Visualization

• Show Threshold Lines: Toggles the visibility of the dynamic boundary lines.
• Color Candles: Optionally applies the regime colors to the price chart candles.
• Show Extreme Bands: Displays shaded zones based on distance from the midline.

Divergences

• Calculate Divergences: Enables the detection of regular bullish and bearish patterns.
• Pivot Left/Right: The number of bars required on either side to confirm a swing high or low.
• Min/Max Pivot Distance: Sets the range (in bars) allowed between compared pivots.

FAQ

How do I access the Adaptive RSI?

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

Why are the overbought/oversold levels moving?

The thresholds are based on the historical percentile of the RSI values. This ensures that "overbought" is defined relative to recent volatility rather than an arbitrary number.

What is the best timeframe for this indicator?

While it works on all timeframes, the 15-60 min range is often ideal for intraday regime identification, while the 4H and Daily timeframes are better for swing trading and macro divergence analysis.