RSI Trends

The RSI Trends indicator is a momentum-based tool designed to identify and follow market trends by categorizing Relative Strength Index (RSI) values into specific directional zones.

Usage

The indicator classifies market conditions into three primary states based on the RSI position relative to user-defined thresholds:

• Uptrend: Occurs when the RSI is above the Upper Threshold (default 60). This suggests strong bullish momentum.
• Downtrend: Occurs when the RSI is below the Lower Threshold (default 40). This suggests strong bearish momentum.
• Sideways: Occurs when the RSI is between the 40 and 60 levels. This indicates a lack of clear directional conviction.

Users can opt for a "long-short only" approach by setting both the Upper and Lower Thresholds to 50. In this configuration, the market is considered in an uptrend whenever the RSI is above 50 and in a downtrend when it is below 50.

Details

While the RSI is commonly used as an oscillator to find overbought or oversold reversals, the RSI Trends tool repurposes the calculation to validate trend persistence. By focusing on thresholds rather than extremes, it filters out minor fluctuations and highlights sustained momentum. The indicator also includes bar coloring to visually sync the price action with the RSI's current state.

Note that the RSI is calculated based on closing prices; therefore, signals are typically confirmed only once the current bar has closed.

Settings

• RSI Length: Determines the number of bars used to calculate the Relative Strength Index.
• Upper Threshold: Sets the level above which the trend is considered bullish (Default: 60).
• Lower Threshold: Sets the level below which the trend is considered bearish (Default: 40).
• Colored Bars: A toggle to enable or disable price bar coloring based on the current RSI trend state.

FAQ

How do I use RSI Trends to filter sideways markets?

By keeping a gap between the Upper and Lower Thresholds (e.g., 60 and 40), the indicator will treat the middle zone as neutral/sideways, helping you avoid trading in choppy environments.

Why do the colors change only after a candle closes?

The RSI calculation relies on the close price of the bar. To ensure the signal is valid and won't repaint, the indicator confirms the trend state at the end of the candle duration.

How can I access the RSI Trends indicator?

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