Laguerre RSI (Self-Adjusting Alpha with Fractals Energy)

The Laguerre RSI (Self-Adjusting Alpha with Fractals Energy) indicator provides a smoothed version of the Relative Strength Index that utilizes Laguerre polynomials to reduce noise while maintaining low latency. By integrating Fractals Energy, the tool can dynamically adjust its alpha parameter to better adapt to market volatility and trend exhaustion.

Usage

The indicator can be used similarly to the standard RSI but with significantly less lag and noise. Traders typically monitor the following levels:

• Overbought (0.8 or 80): When the LRSI line exceeds this level, the market may be overextended to the upside. A cross back below this level often signals a potential bearish reversal.
• Oversold (0.2 or 20): When the LRSI line falls below this level, the market may be overextended to the downside. A cross back above this level often signals a potential bullish reversal.
• Dynamic Alpha: When "Apply Fractals Energy" is enabled, the indicator calculates the market's fractal dimension. High values suggest a trending market (lower alpha, more smoothing), while low values suggest a range-bound or choppy market (higher alpha, more reactivity).

Details

This implementation is based on John Ehlers' Laguerre RSI work, further enhanced with the "Fractals Energy" concept. The Fractals Energy component calculates a value based on the relationship between price range and the total path traveled over a specific period. This value is used as the alpha (gamma) factor in the Laguerre calculations, allowing the indicator to speed up or slow down based on price action geometry. If the Fractals Energy option is disabled, the script reverts to a standard Laguerre RSI using a fixed alpha input.

Settings

• Alpha: The fixed smoothing factor used when Fractals Energy is disabled (range 0 to 1).
• Highlight Bands Crossovers?: Toggles visual markers (circles) on the chart when the RSI crosses the overbought or oversold levels.
• Apply Fractals Energy?: Enables the dynamic self-adjusting alpha based on fractal dimensions.
• Fractals Energy Length: The lookback period used to calculate the Fractals Energy value.
• Apply Normalization to [0, 100]?: If enabled, scales the indicator output from 0–100 instead of the standard 0–1 range.
• Source: The price data used for the calculations (default is Close).

FAQ

How do I access the Laguerre RSI (Self-Adjusting Alpha with Fractals Energy)?

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

What is the advantage of using Laguerre RSI over standard RSI?

Laguerre RSI uses four-pole filters to provide much smoother output with significantly less lag than a standard RSI, which often requires a longer period and produces more noise to achieve similar smoothing.

How does Fractals Energy affect the signals?

Fractals Energy makes the indicator adaptive. In a strong trend, the indicator becomes "stickier" to prevent premature exit signals, whereas in a choppy market, it becomes more responsive to capture quick swings.