RSI Indicator

The RSI Indicator tool provides an enhanced Relative Strength Index experience by integrating automated divergence detection and overbought/oversold signal markers. It aims to help traders identify potential trend reversals and exhaustion points through a combination of classical momentum analysis and advanced pivot-based filtering.

Usage

The indicator can be used to identify momentum shifts and trend exhaustion. Users can monitor the RSI line for entries into the overbought (default 70) or oversold (default 30) zones, which are visually highlighted with colored background fills.

Key features include:

• Divergence Detection: The script automatically identifies Regular and Hidden divergences between price action and the RSI oscillator. Regular divergences typically suggest a potential reversal, while hidden divergences often indicate trend continuation.
• Buy/Sell Signals: Circular markers appear on the RSI line when the oscillator forms a pivot within the overbought or oversold zones, providing discrete signal points.
• Visual Labels: Labels marked 'R' (Regular) and 'H' (Hidden) appear on the oscillator to clearly denote different divergence types.

Details

The script utilizes pivot high and pivot low logic to identify peaks and troughs in both price and the RSI. It includes a "no-cut" verification system to ensure that the trendlines connecting these pivots are not invalidated by intermediate price action, increasing the reliability of the detected divergences. The divergence logic checks for specific conditions:

• Regular Bullish: Price makes a lower low while RSI makes a higher low.
• Hidden Bullish: Price makes a higher low while RSI makes a lower low.
• Regular Bearish: Price makes a higher high while RSI makes a lower high.
• Hidden Bearish: Price makes a lower high while RSI makes a higher high.

Settings

General Settings

• RSI Period: Sets the lookback period for the RSI calculation (default is 14).
• RSI Source: Determines the price data used for the oscillator (default is Close).
• Pivot Lookback Right/Left: Adjusts the number of bars required to confirm a pivot point.
• Overbought/Oversold: Defines the threshold levels for the oscillator extremes.
• Show Buy/Sell Signals: Toggles the circular markers on the RSI line.

Divergence Input

• Divergence Type: Choose between Regular, Hidden, Both, or None.
• Show Label: Toggles the 'R' and 'H' visual labels.
• Show Pivot Points: Displays [PH] and [PL] labels at detected pivot locations.
• Max/Min of Lookback Range: Sets the bar range limits for detecting pivots relative to the current bar.

FAQ

How do I access the RSI Indicator?

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

What is the difference between Regular and Hidden divergence?

Regular divergence indicates a potential trend reversal, while Hidden divergence typically suggests that the current trend is likely to continue after a retracement.

Can I set alerts for the signals?

Yes, the indicator includes multiple alert conditions for overbought/oversold crosses, detected divergences, and specific buy/sell signals.