True Relative Strength Index (True RSI / TRSI)

The True Relative Strength Index (True RSI / TRSI) indicator provides a mathematically corrected version of the traditional RSI to eliminate asymmetrical bullish bias found in standard calculations. This tool is designed to offer a more accurate representation of momentum, especially over wider price ranges and longer-term charts.

Usage

The Usage of the True Relative Strength Index (True RSI / TRSI) is similar to the standard RSI, utilizing overbought and oversold levels to identify potential trend reversals. However, because it removes the inherent bias of the traditional formula, it provides a more balanced oscillator.

• Trend Reversals: Traders can monitor for crossovers above the 30 level (oversold recovery) or crossunders below the 70 level (overbought reversal).
• Divergence: Like traditional momentum oscillators, TRSI can be used to spot divergences between price action and momentum.
• Comparative Analysis: By enabling the "Show Standard RSI" setting, users can compare the "True" calculation against the classic version to see how price volatility impacts the traditional RSI's symmetry.

Details

The traditional RSI formula often exhibits a bullish bias, particularly noticeable during periods of significant price appreciation or wide ranges. This asymmetry occurs because of how gains and losses are normalized in the standard equation.

The TRSI implementation addresses this by adjusting the normalization factor. In its default mode, it uses the average of the current and previous price to normalize the price change (ta.change(src) / math.avg(src, src[1])). This ensures that the magnitude of percentage changes is treated consistently, regardless of whether the price is moving up or down from a high or low base. The resulting oscillator remains bound between 0 and 100, centered at 50, providing a more reliable reference for overbought and oversold conditions.

Settings

• Source: Determines the price data used for the calculation (default is Close).
• Length: Sets the lookback period for the Relative Moving Average (RMA) used in the calculation.
• Show Standard RSI: When enabled, the indicator reverts to a standard RSI calculation method, allowing users to verify the differences between the two models.

FAQ

How do I use the True Relative Strength Index (True RSI / TRSI)?

You can use it just like a standard RSI to identify overbought (>70) and oversold (<30) conditions, but with greater confidence that the levels are mathematically balanced.

What is the difference between TRSI and standard RSI?

Standard RSI can develop an asymmetrical bias in long-term charts with wide price ranges. TRSI corrects this by adjusting how price changes are normalized, leading to a more "true" representation of relative strength.

Where can I access this tool?

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