Webby RSI 2.0

The Webby RSI 2.0 indicator is a technical tool designed to measure price extension from key moving averages using volatility-adjusted metrics to identify potential overextended market conditions.

Usage

The Webby RSI 2.0 serves as a momentum and mean-reversion gauge. Traders can monitor the following histogram and line outputs:

• Above 21 EMA Extension: When price action is above the 21-day EMA, the indicator calculates the distance between the bar's low and the EMA. If this value exceeds the user-defined "Stretched Level" (default is 3 ATRs), it suggests the security may be overextended to the upside.
• Below 21 EMA Extension: When price action is below the 21-day EMA, the tool measures the distance between the EMA and the bar's high. Crossing the "Stretched Level" indicates a significant downside extension.
• SMA Extension Line: This secondary calculation measures the high of the bar relative to the 10-day SMA. This is often used as a tactical guide for taking partial profits when short-term momentum becomes vertical.

Details

Unlike traditional RSI oscillators that bound values between 0 and 100 based on price change velocity, Webby RSI 2.0 focuses on distance from mean prices. A key evolution in version 2.0 is the transition from percentage-based distance to ATR-based distance. By dividing the price spread (Low/High vs EMA) by the 50-day Average True Range (ATR), the indicator normalizes the extension across different assets and volatility regimes. This ensures that a "Stretched" reading represents a statistically significant move relative to the security's recent historical volatility.

Settings

• Atr Length: Determines the lookback period for the Average True Range used to normalize the extension values.
• Stretched Level: The threshold (expressed in multiples of ATR) that triggers an overextended signal and visual alerts.
• Above 21 Color: Customizes the histogram color when the security is trading above its 21-period EMA.
• Below 21 Color: Customizes the histogram color when the security is trading below its 21-period EMA.
• Moving Average Extension Color: Sets the color for the 10-day SMA extension line.

FAQ

How do I interpret the "Stretched Level"?

The Stretched Level represents how many ATRs the price is currently away from the 21-day EMA. A value of 3 means the specific price point (Low or High) is 3 Average True Ranges away from the mean.

What is the difference between the histogram and the line?

The histogram represents the primary trend extension relative to the 21-day EMA, while the line represents a shorter-term extension from the 10-day SMA, typically used for immediate profit-taking targets.

How can I access this indicator?

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