RSI Trend Authority

The RSI Trend Authority indicator provides a complete trend detection and signal generation system by combining Variable Index Dynamic Average (VAR) smoothed RSI with the Optimized Trend Tracker (OTT). This tool scales the RSI to price and overlays it directly on the chart, making momentum and trend analysis more intuitive by removing the need for a separate oscillator pane.

Usage

The RSI Trend Authority can be used to identify trend changes and potential entry points through its overlay system. A bullish trend is confirmed when the VAR-RSI line crosses above the OTT line, while a bearish trend is confirmed when it crosses below.

Examples of usage include:

• Trend Following: Traders can look for "BUY" labels to enter long positions and "SELL" labels for short positions.
• Trailing Stops: The OTT line, displayed as circles, acts as a dynamic support or resistance level that can be used for stop-loss placement.
• Volatility Context: The optional ATR boundaries help identify overextended price conditions, suggesting potential profit-taking zones or reversal areas.
• Dashboard Monitoring: The integrated status table provides real-time data on the current signal, RSI state (Overbought/Oversold), and the number of bars since the last trend shift.

Details

The script utilizes several advanced technical concepts to improve signal reliability:

• VAR Smoothing: Traditional RSI can be noisy. This script uses the Variable Index Dynamic Average (VAR), an adaptive algorithm based on the Chande Momentum Oscillator. It adjusts the smoothing factor based on market volatility, responding faster during trends and smoothing out during choppy conditions.
• OTT Mechanism: The Optimized Trend Tracker is a percentage-based trailing stop that only moves in the direction of the current trend, reducing whipsaws in sideways markets.
• Price Scaling: To allow the RSI (0-100) to be plotted on the price chart, the script scales the value using the formula (RSI * close / 50). This allows traders to observe momentum in direct relation to price levels.

Settings

RSI Settings

• RSI Length: The period used for the underlying RSI calculation.
• Source: The price data source used for calculations (e.g., Close).

VAR Settings

• VAR Length: The period for the adaptive smoothing algorithm.

OTT Settings

• OTT Period: The calculation period for the trailing stop mechanism.
• OTT Percent: The percentage distance for the trailing stop; lower values result in tighter tracking.

ATR Trend Boundaries

• Show ATR Boundaries: Toggles the visibility of volatility-based bands.
• ATR Length: The period used for the Average True Range calculation.
• ATR Multiplier: Sets the distance of the bands from the price.

Display Options

• Show Buy/Sell Signals: Enables or disables the plot labels on crossovers.
• Show Status Table: Toggles the dashboard panel visibility.
• Table Position: Adjusts where the dashboard is displayed on the chart.
• Color Bars by Trend: Optionally changes the color of price bars based on the current trend.

FAQ

How do I access the RSI Trend Authority? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.

What timeframes are best for this indicator? While it can be used on any timeframe, it is generally more reliable on the 1H timeframe or higher to filter out minor market noise.

Can I set alerts for trend changes? Yes, the script includes built-in alert conditions for Buy signals, Sell signals, and general trend direction changes.