Volume Spike RSI

The Volume Spike RSI indicator identifies potential market reversals by detecting significant volume surges that occur when the Relative Strength Index (RSI) is in overbought or oversold territory.

Usage

The Volume Spike RSI is used to highlight high-conviction exhaustion points in the market. A signal is generated when two conditions are met simultaneously:

1. Volume Spike: Current volume exceeds the average volume (defined by a Simple Moving Average) multiplied by a user-defined threshold.
2. Extreme RSI Levels: The RSI value is either above the overbought line or below the oversold line.

Examples:

• Buy Signal (Green Arrow): Appears when volume spikes while the RSI is below the oversold threshold, suggesting a potential bottom or bullish reversal.
• Sell Signal (Red Arrow): Appears when volume spikes while the RSI is above the overbought threshold, suggesting a potential top or bearish reversal.

Details

This tool is based on the "Capitalize AI: Volume Spike Strategy" concept. It combines momentum and volume analysis to filter out standard RSI signals, focusing only on those backed by significant market participation. The script calculates an overbought line and an oversold line based on a single symmetry input; for example, if the input is set to 25, the oversold line is 25 and the overbought line is 75 (100 - 25).

Settings

• RSI Length: Determines the number of bars used to calculate the Relative Strength Index.
• Overbought/Oversold: Sets the distance from the 0 and 100 levels for the signal thresholds. Setting this to 25 creates levels at 25 and 75.
• Volume MA Length: The lookback period for the Simple Moving Average of volume used to determine the "average" volume.
• Volume Multiplier: The factor by which current volume must exceed the average volume to be considered a "spike."

FAQ

How do I access Volume Spike RSI?

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

What timeframes work best for this indicator?

While the script can be used on any timeframe, it was originally tested on lower timeframes like the 1-minute chart to capture rapid exhaustion moves.

Can I change the sensitivity of the signals?

Yes, by increasing the Volume Multiplier or adjusting the Overbought/Oversold threshold, you can make the indicator more selective, resulting in fewer but potentially stronger signals.