RSI_dots + SMA

The RSI_dots + SMA indicator provides a visually enhanced Relative Strength Index (RSI) that highlights momentum shifts using color-coded dots and an optional Simple Moving Average (SMA) for trend smoothing.

Usage

The RSI_dots + SMA indicator is used to identify overbought and oversold conditions with greater visual clarity. When the RSI value is within the user-defined bounds (typically 30 and 70), the line remains a neutral color. When the RSI exits these zones, the line and its associated dots change to a distinct red color, signaling potential reversal points or strong momentum.

Users can toggle an SMA of the RSI to filter out market noise and identify the underlying momentum trend. Additionally, the script features an optional "Gray bars" mode which desaturates price bars on the main chart when the RSI is within the neutral zone, helping traders focus on price action during extreme momentum readings.

Details

The script calculates the standard RSI based on the Relative Moving Average (RMA) of price changes over a specific period. It expands upon the traditional RSI by incorporating conditional logic for visual feedback:

• Dots: Circles are plotted on the RSI line to emphasize each data point.
• Dynamic Coloring: The RSI line and dots change color based on whether the current value is outside the specified Top and Bottom lines.
• Smoothing: A Simple Moving Average (SMA) can be applied to the RSI values to help identify the direction of the momentum.

Settings

• Length RSI: Sets the lookback period for the RSI calculation (default is 14).
• Show SMA: Toggles the visibility of the Simple Moving Average line.
• Length MA: Determines the period used for the SMA of the RSI.
• Top Line: Sets the upper threshold for the overbought zone (default is 70).
• Bottom Line: Sets the lower threshold for the oversold zone (default is 30).
• Gray bars: When enabled, turns chart bars gray while the RSI is within the neutral range (between the Top and Bottom lines).

FAQ

How do I use the RSI dots for entries?

The dots provide a visual confirmation of when the RSI has exited the neutral zone. Traders often look for the color change back to neutral or a cross of the SMA as potential exit or entry signals.

What is the purpose of the Gray bars setting?

The Gray bars setting is a visual aid that minimizes chart noise during periods of low momentum, allowing you to react more quickly when price action regains strength outside of the RSI bounds.

How can I access RSI_dots + SMA?

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