RSI of Ultimate Oscillator [SHORT Selling] Strategy

The RSI of Ultimate Oscillator [SHORT Selling] Strategy indicator is a specialized momentum tool designed to identify short-selling opportunities by applying the Relative Strength Index (RSI) to the Ultimate Oscillator. This approach filters momentum signals through a secondary layer of volatility, helping traders pinpoint bearish reversals within established downtrends.

Usage

The strategy is primarily designed for short-side trading on hourly timeframes. It combines momentum oscillators with trend-following moving averages to ensure trades are taken in the direction of the broader trend.

• Short Entry: A short position is initiated when the Williams Alligator lines (Jaw, Teeth, and Lips) are aligned in a bearish formation (Lips < Teeth < Jaw) and the RSI of the Ultimate Oscillator drops below the Sell Line (defaulted to 60).
• Partial Exit: The strategy implements a partial profit-taking mechanism when the RSI of the Ultimate Oscillator crosses back above the oversold level (30) while the trade is in profit.
• Full Exit: All remaining short positions are covered when the RSI of the Ultimate Oscillator crosses above the overbought level (75).
• Visual Cues: When a short trade is active, the bar color and background change to purple/blue to provide immediate visual feedback on the strategy status.

Details

The script constructs the Ultimate Oscillator using three different periods (default 5, 10, 15) to capture momentum across various cycles. By applying a 5-period RSI to this result, the strategy smooths out noise and identifies specific exhaustion points.

Trend filtering is handled via Smoothed Moving Averages (SMMA) inspired by the Williams Alligator. Although these averages are not plotted by default to keep the interface clean, they are calculated internally to validate that short entries only occur during bearish regimes.

Settings

• Length 1/2/3: Determines the three timeframes used to calculate the underlying Ultimate Oscillator.
• RSI UO Length: Sets the lookback period for the RSI applied to the Ultimate Oscillator output.
• Sell at RSIofUO: Defines the threshold level for entering a short position.
• Cover at RSIofUO: Defines the threshold level for exiting/covering a short position.
• Risk % of Capital: Sets the percentage of equity used to calculate position size based on risk.
• Stop Loss: Sets the percentage-based stop loss for the strategy.
• Show Ultimate Oscillator: Toggle to display the raw Ultimate Oscillator on the chart.

FAQ

How do I use this indicator? You can apply the script to your chart and monitor for purple bar highlights which indicate an active short trade based on the crossover of the RSI of UO and the trend filter.

Can this be used for long trades? This specific version of the script is hardcoded as a short-selling strategy and does not contain logic for long entries.

How can I access the RSI of Ultimate Oscillator [SHORT Selling] Strategy? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.