Relative Strength Index (Log/Divs/MTF/EMA)

The Relative Strength Index (Log/Divs/MTF/EMA) indicator provides a modified RSI calculation using log-transformed price data, equipped with automatic divergence detection and multi-timeframe EMA smoothing for trend confirmation.

Usage

The tool can be used to identify trend exhaustion and potential reversals through its divergence detection system. It plots regular and hidden bullish/bearish divergences directly on the RSI oscillator.

• Regular Divergences (R): Suggest a possible trend reversal when price and RSI move in opposite directions.
• Hidden Divergences (H): Suggest trend continuation when RSI makes a lower low/higher high while price does not.
• EMA Signal: A built-in EMA (defaulting to a 1-hour resolution) serves as a signal line to help traders filter RSI movements against a higher timeframe trend.
• Log RSI: By using the logarithm of the source price, the indicator provides a more balanced representation of price changes, which can be particularly useful for assets with high volatility or significant long-term growth.

Details

The script implements a log-space RSI based on concepts by fskrypt. The divergence logic is derived from work by JustUncleL and RicardoSantos, utilizing a fractal-based approach (5-bar window) to identify peaks and troughs.

The indicator also features Multi-Timeframe (MTF) capabilities, allowing users to calculate the RSI on a different resolution than the current chart while keeping a fixed 60-minute EMA for consistent trend context.

Settings

• RSI Length: Sets the lookback period for the RSI calculation.
• Source: Determines the price data used (Close, Open, High, Low, etc.).
• Show Divergences: Toggles the visibility of divergence labels and markers.
• Show Divergences Channel: Displays lines connecting the fractal highs and lows within the oscillator.
• Highlight Divergences: Enables background highlighting when a divergence is detected.
• EMA Length: Adjusts the period of the Exponential Moving Average.
• Use Custom RSI/EMA Resolution: Enables the multi-timeframe functionality.
• Custom Resolution: Defines the timeframe used for the RSI calculation when the custom resolution setting is active.

FAQ

How do I interpret the "R" and "H" labels?

"R" stands for Regular Divergence, typically indicating a potential reversal. "H" stands for Hidden Divergence, which often signals that the current trend is likely to continue.

Can I use this for intraday scalping?

Yes, by adjusting the "Custom Resolution" or the RSI Length, you can tailor the sensitivity of the indicator to suit shorter timeframes.

How can I access Relative Strength Index (Log/Divs/MTF/EMA)?

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