OBV RSI

The OBV RSI indicator is a momentum tool that integrates On Balance Volume (OBV) into a Relative Strength Index (RSI) calculation to help traders visualize volume-driven momentum and identify potential trend reversals.

Usage

The OBV RSI can be used to identify overbought and oversold conditions based on volume flow rather than just price action. When the indicator line crosses above the Higher Level (default 70), it may suggest that volume-driven buying pressure has reached an extreme. Conversely, a cross below the Lower Level (default 30) suggests that selling pressure has reached an extreme.

The tool includes a visual table monitor that tracks how many times these specific level crosses have occurred over a set historical period. This allows traders to gauge the frequency of extreme momentum shifts in the current market context.

Details

The indicator first calculates the standard On Balance Volume (OBV), which accumulates volume based on whether the current close is higher or lower than the previous close. It then applies the RSI formula to these OBV values. By calculating the RSI of OBV, the tool filters volume fluctuations through a momentum oscillator, smoothing out the data and providing a bounded range (0-100) for easier interpretation of volume accumulation and distribution.

Settings

Strategy Modification

• RSI Length: Determines the lookback period used for the RSI calculation applied to the OBV data.
• Higher Level: Sets the upper threshold for overbought conditions (default is 70).
• Lower Level: Sets the lower threshold for oversold conditions (default is 30).

RSI Cross Monitor

• Show Table: Toggles the visibility of the statistics table in the bottom right corner of the chart.
• Table Lookback Length: Defines the number of bars the script looks back to count the occurrences of level crossovers.

FAQ

How do I use the OBV RSI?

You can use it to find potential turning points in the market by looking for crosses above or below the defined overbought and oversold levels, which are driven by volume momentum.

What is the advantage of using RSI on OBV?

Using RSI on OBV provides a clearer picture of volume trends compared to standard OBV, as it normalizes the data into a fixed scale, making it easier to identify extremes in buying and selling pressure.

How can I access OBV RSI?

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