RSI -SUPERTREND

The RSI -SUPERTREND indicator is a hybrid technical analysis tool that integrates the trend-following mechanics of the Supertrend with the momentum-measuring properties of the Relative Strength Index (RSI). By calculating an RSI based on trailing stop levels rather than direct price data, it provides a unique perspective on momentum shifts within a trend-following framework.

Usage

The Usage section describes how the script can be used to identify trend direction and potential reversal points. The indicator plots a modified RSI line that changes color based on the relationship between three different Supertrend trailing stop levels.

• Bullish Trend: When the RSI line is green, it indicates that the calculated trailing stops are in an ascending sequence, suggesting strong upward momentum.
• Bearish Trend: When the RSI line is red, it suggests a descending sequence of trailing stops, indicating downward pressure.
• Neutral/Transition: An orange line signifies a mixed state where the different Supertrend factors are not in a clear trend alignment.
• Overbought/Oversold: The horizontal lines at 70 and 30 help identify extreme momentum levels relative to the Supertrend-derived RSI.
• Signals: The indicator plots 'b' (buy) and 's' (sell) characters on the oscillator pane when the price crosses the median Supertrend level (factor 2), serving as confluence signals.

Details

The script executes by first calculating three distinct Supertrend Trailing Stop Levels (TSL) using different multipliers (factors). Instead of calculating the RSI on the closing price, the indicator calculates the RSI based on the second trailing stop level (tsl2).

This construction aims to filter out minor price noise and focus on the momentum of the trend's "floor" or "ceiling." The coloring logic creates a consensus-based trend indicator by checking if the three Supertrend levels are stacked (e.g., Factor 1 < Factor 2 < Factor 3 for a bearish bias).

Settings

• Overbought: Sets the upper threshold for the RSI (default is 70).
• Oversold: Sets the lower threshold for the RSI (default is 30).
• Show Super-Trend Lines: Toggle to enable or disable the visualization of the internal trend logic (if applicable to the plot style).
• Factor 1/2/3: Multipliers that determine the distance of the Supertrend trailing stops from the price.
• Length (len): The lookback period used for the RSI calculation.

FAQ

How do I interpret the color changes on the RSI line?

The color changes from green to red based on the alignment of three Supertrend factors. Green indicates a bullish alignment, red indicates a bearish alignment, and orange indicates a trend transition or lack of consensus.

What do the 'b' and 's' characters represent?

These are signal markers that appear when the price crosses the primary Supertrend level, indicating a potential change in the underlying trend direction.

How can I access this indicator?

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