Reverse Engineered RSI - Key Levels + MTF

The Reverse Engineered RSI - Key Levels + MTF indicator projects specific RSI levels directly onto the price chart, allowing traders to visualize momentum-based support and resistance levels without needing a separate oscillator window.

Usage

The tool is primarily used to identify where price must trade for the RSI to reach a specific value. By overlaying these levels on the main chart, traders can observe price reactions at momentum thresholds.

• Trend Identification: The Uptrend and Downtrend limits (defaulted to 60 and 40) act as dynamic zones. In a strong uptrend, price often stays above the 40-50 zone, which acts as support.
• Overbought/Oversold Reversions: The 70 and 30 levels projected on the chart serve as exhaustion points. Traders can look for price action reversals when the candles interact with these outer bounds.
• Multi-Timeframe Analysis: By using the MTF feature, users can plot higher timeframe RSI levels (e.g., 4-hour levels on a 15-minute chart) to find confluence between short-term price movement and long-term momentum trends.

Details

The Reverse Engineered RSI (RERSI) concept was originally introduced by Giorgos Siligardos in 2003. Unlike a standard RSI that oscillates in a sub-pane, the RERSI calculates the price value required to achieve a certain RSI reading based on the most recent data.

This implementation includes a Zero Lag Moving Average (ZEMA) smoothing component to filter out market noise, resulting in cleaner level lines. The script also employs logarithmic calculations to ensure compatibility across various asset classes, including volatile crypto markets.

Settings

Levels

• Mid Level - Usually 50: The neutral RSI level projected as a price line.
• Uptrend Limit: The RSI level typically used to define the upper boundary of a bullish regime (default 60).
• Downtrend Limit: The RSI level typically used to define the lower boundary of a bearish regime (default 40).
• Overbought Level: The price level corresponding to the 70 RSI value.
• Oversold Level: The price level corresponding to the 30 RSI value.

Calculations

• RSI Length: The lookback period for the RSI calculation (default 14).
• Zero Lag MA Length: The period for the smoothing filter applied to the RERSI lines.

Timeframe

• Use Current Chart Resolution?: When enabled, the indicator uses the timeframe of the active chart.
• Custom Timeframe?: Allows the user to specify a different timeframe (e.g., 240 for 4-hour) to be projected onto the current chart.

FAQ

How do I use the MTF feature?

Uncheck "Use Current Chart Resolution" in the settings and enter your desired timeframe in the "Custom Timeframe" field. This will overlay RSI levels from that higher period onto your current chart.

What do the 40 and 60 levels represent?

Based on momentum theory, these levels often act as "floors" or "ceilings" during established trends. In a strong uptrend, the 40 level (Downtrend Limit) often acts as support.

How can I access Reverse Engineered RSI - Key Levels + MTF?

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