EMARSI, New Moving Average

The EMARSI indicator provides a specialized hybrid moving average that integrates Relative Strength Index (RSI) dynamics with an Exponential Moving Average (EMA) to better visualize trend momentum and market direction. This tool aims to enhance standard trend-following techniques by increasing sensitivity to price changes through RSI-weighted adjustments.

Usage

The EMARSI indicator is primarily used to identify strong trend phases and potential exhaustion points. Users can interpret the relationship between the price, the standard EMA, and the EMARSI line to gauge market strength:

• Strong Bullish Momentum: Confirmed when the Price is above both the EMA and EMARSI, and the EMARSI line is positioned above the standard EMA.
• Strong Bearish Momentum: Confirmed when the Price is below both the EMA and EMARSI, and the EMARSI line is positioned below the standard EMA.
• Range or Exhaustion: When the conditions above are not met, it suggests the market is entering a ranging phase or that the current momentum is losing strength.
• Crossover Signals: When the "Smooth" mode is enabled, crossovers between the EMARSI and the standard EMA serve as indicators of significant trend reversals or momentum shifts.

Details

The EMARSI indicator functions by modifying the input source with an RSI-based weighting factor before applying an exponential moving average. The core logic involves two distinct calculation modes:

1. Standard Mode: The RSI value is used as a direct multiplier (controlled by the RSI Effect setting) to adjust the price. The resulting moving average reacts more aggressively to price movements that coincide with high or low RSI levels.
2. Smooth Mode: Instead of raw RSI values, the script utilizes the change in RSI relative to its average. This focuses the indicator on the velocity of momentum changes rather than absolute levels, creating a smoother output that is effective for crossover strategies.

The indicator dynamically colors the standard EMA plot to highlight when the price and both moving averages are in full alignment, providing a clear visual cue for strong trends.

Settings

• Length: Determines the lookback period used for both the RSI calculation and the Exponential Moving Average.
• Source: Specifies the price data used for the calculations (e.g., Close, Open, High, Low).
• Offset: Shifts the indicator plots forward or backward on the timeline.
• Smooth ?: A boolean toggle that switches the calculation method between a direct RSI weight and a weight based on RSI changes.
• RSI Effect to Price (1-100): Adjusts the intensity of the RSI’s influence on the price source when the "Smooth" option is disabled.

FAQ

How does EMARSI differ from a standard EMA? EMARSI incorporates RSI data into the price source before the average is calculated, making it more responsive to momentum shifts than a standard EMA, which only considers price.

What is the best way to identify a trend reversal using this tool? Trend reversals are often signaled by the EMARSI crossing the standard EMA, especially when the "Smooth" option is active, or when price breaks the alignment of the three-component trend criteria.

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