Momentum RSI+

The Momentum RSI indicator is a specialized momentum oscillator designed to categorize market conditions into specific directional and exhaustion phases based on Relative Strength Index (RSI) thresholds.

Usage

The Momentum RSI provides a nuanced look at price action by dividing the standard RSI range into five distinct zones:

• Upward Momentum: When the RSI is between 50% and 70%, the price is considered to be in an active bullish trend.
• Downward Momentum: When the RSI is between 30% and 50%, the price is considered to be in an active bearish trend.
• Consolidation/Neutral: When the RSI fluctuates between 40% and 60%, the market is interpreted as having no clear directional momentum, signaling range-bound behavior.
• Overbought: An RSI reading above 70% suggests the market is reaching an exhaustion point to the upside.
• Oversold: An RSI reading below 30% suggests the market is reaching an exhaustion point to the downside.

The indicator features a smoothed RSI line (RSI+) that changes color based on its own directional slope (Green for upward, Red for downward), allowing traders to visualize momentum shifts within these zones.

Details

The script calculates a standard Relative Strength Index using the Relative Moving Average (RMA) of price changes over a user-defined length. It then applies an Exponential Moving Average (EMA) to the RSI value to filter out market noise and provide the "RSI+" plot. The inclusion of dynamic threshold levels—specifically the 40, 50, and 60 levels—allows for a more granular analysis of trend strength compared to traditional 30/70 RSI interpretations.

Settings

Main Settings

• Length: Determines the period used for the RSI calculation.
• RSI EMA Length: Sets the smoothing factor for the primary colored RSI+ line. Using a value of 1 provides the raw RSI.

Threshold Settings

• Overbought: Sets the upper threshold for exhaustion (default 70).
• Upward Momentum: Sets the upper bound for the bullish momentum zone (default 60).
• Neutral: Sets the midpoint level (default 50).
• Downward Momentum: Sets the lower bound for the bearish momentum zone (default 40).
• Oversold: Sets the lower threshold for exhaustion (default 30).

FAQ

How do I use the Momentum RSI for trend entries?

Traders often look for the RSI+ line to cross above the 50 level and hold within the 50-70 range to confirm bullish momentum, or cross below 50 to confirm bearish momentum.

What does the color change on the RSI line mean?

The color of the RSI+ line is determined by its current slope; a green line indicates the RSI value is increasing compared to the previous bar, while a red line indicates it is decreasing.

How can I access the Momentum RSI?

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