Double Relative Strength Index (Double RSI)

The Double Relative Strength Index (Double RSI) indicator provides a multi-layered approach to momentum analysis by plotting two or three smoothed RSI lines to identify trend direction and potential market reversals.

Usage

The tool can be utilized to gauge the short-term and long-term strength of price movements through its dual or triple RSI configurations.

• Trend Identification: In "v1", a bullish trend is signaled when the fast RSI (Length 1) is above the slow RSI (Length 2). In "v2", a strong bullish trend is identified when the lines are stacked in order: RSI 1 > RSI 2 > RSI 3.
• Crossovers: Traders can look for crossovers between the RSI lines as potential entry or exit points. The script highlights these events with color-coded bar changes on the chart.
• Overbought/Oversold Levels: Horizontal lines at key Fibonacci-derived levels (23.6, 38.2, 50, 61.8, 78.6) serve as visual guides for extreme momentum conditions.

Details

The script enhances the standard Relative Strength Index by applying a secondary smoothing layer. Users can choose from various moving average types (RMA, SMA, EMA, WMA, HMA) to filter out market noise. The indicator offers two versions:

• v1 (Double RSI): Focuses on the interaction between two RSI lines.
• v2 (Triple RSI): Adds a third RSI component for a more robust trend confirmation, requiring all three lines to align in a specific order to signal a trend.

Settings

Main Settings

• Version: Selects between the two-line (v1) or three-line (v2) calculation mode.
• Length 1: The period for the fastest RSI line.
• Length 2: The period for the intermediate RSI line.
• Length 3: The period for the third RSI line (active only in v2).
• Source: The price data used for the RSI calculation (e.g., Close, Open, HL2).
• Smoothing: Determines the moving average type used to smooth the RSI values. Options include None, RMA, SMA, EMA, WMA, and HMA.

FAQ

How do I use the different versions?

You can toggle between v1 and v2 in the settings. Use v1 for classic fast/slow crossover signals and v2 for a more conservative trend-following approach involving three distinct periods.

What do the background bands represent?

The bands and horizontal lines represent key momentum thresholds. Staying within the central gray band suggests neutral momentum, while movements toward the red (top) or green (bottom) lines suggest reaching overextended momentum levels.

How 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.