MTF RSI & SMA Crossover [OB/OS Filtered Signals]

The MTF RSI & SMA Crossover [OB/OS Filtered Signals] indicator provides a comprehensive momentum trading framework by combining Multi-Timeframe RSI analysis, smoothed moving average crossovers, and a sophisticated macro-economic grading system. It aims to identify high-probability trend reversals by filtering RSI signals through overbought and oversold conditions while optionally contextualizing them with broad market health metrics.

Usage

The tool generates buy and sell signals based on the interaction between the RSI and its Moving Average (MA).

• Buy Signals: Triggered when the RSI crosses above its MA. This is most potent when the cross occurs while the RSI is below the oversold level (OS) or shortly after exiting it.
• Sell Signals: Triggered when the RSI crosses below its MA. This is most effective when the cross occurs while the RSI is above the overbought level (OB) or shortly after exiting it.
• Macro Grading: Users can enable the Macro Grade feature to filter signals based on external market factors like the DXY, US10Y, and major indices. Signals are assigned a grade (A, B, or C) representing the strength of the underlying market macro alignment.
• Divergence Detection: The indicator automatically identifies bullish and bearish divergences between price and RSI, helping traders spot potential exhaustion in current trends.

Details

The script utilizes several layers of filtering to reduce noise:

• Smoothing: Traders can choose between various MA types (SMA, EMA, RMA, WMA, VWMA) to smooth the RSI line, allowing for a customized balance between sensitivity and lag.
• Exit Windows: The indicator tracks how many bars have passed since the RSI exited an extreme zone (OB/OS). This ensures that crossover signals are only valid if they occur within a relevant timeframe after a momentum extreme.
• Macro Logic: The macro grade calculates a weighted score from various symbols (e.g., Gold, Nasdaq, High Yield Spreads). It uses the slope of a 50-period MA on a daily or weekly timeframe to determine if the macro environment supports a long or short bias.

Settings

Core RSI

• RSI Length: The lookback period for the RSI calculation.
• RSI Source: The price data used for the RSI (default is Close).
• Overbought/Oversold Levels: Horizontal thresholds used for signal filtering.
• RSI MA Type/Length: Select the moving average method and period used to smooth the RSI.

Visuals & Divergence

• Show Arrows: Toggle signal visibility on the price chart or the RSI pane.
• Calculate Divergence: Enables the automated detection of price/RSI divergences.

Macro Grade (Optional)

• Enable Macro Grade: Toggles the macro-economic scoring system.
• Macro TF: The timeframe used for macro symbol analysis (Daily or Weekly).
• Manual Inputs: Allows manual entry for fundamental data like CPI, PMI, and Labor reports.
• Symbols: Customizable ticker fields for DXY, US10Y, and various asset classes.

FAQ

• How do I interpret the Macro Grade? The Grade (A, B, or C) indicates how well the broad market aligns with your trade direction. An "A" grade suggests strong macro tailwinds, while a "C" grade suggests weaker alignment.
• What is the "Max bars after OS/OB exit" setting? This defines the "window of opportunity." If the RSI leaves the oversold zone, a buy signal must occur within this number of bars to be considered valid.
• How can I access MTF RSI & SMA Crossover [OB/OS Filtered Signals]? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.