Reverse Stochastic Momentum Index On Chart

The Reverse Stochastic Momentum Index On Chart indicator projects critical Stochastic Momentum Index (SMI) levels directly onto the price chart, allowing traders to see the exact price required to trigger momentum crossovers. By reverse-engineering the SMI formula, this tool calculates the specific closing price needed to reach alert levels, the signal line, or the zero line, bridging the gap between oscillator momentum and price action.

Usage

The indicator is designed to help traders plan entries and exits by visualizing momentum thresholds as price levels.

• SMI Equality Price: This level shows the closing price required to keep the SMI at its current value. A close above this line suggests increasing momentum, while a close below suggests decreasing momentum.
• Signal Line Crossover: This plot displays the price at which the SMI will cross its signal line. It is used to anticipate bullish or bearish shifts before they appear on a sub-pane oscillator.
• Alert Levels: Traders can set specific SMI values (defaulting to +40 and -40) to see where the price must reach to enter overbought or oversold territory.
• Zero Line: Displays the price required for the SMI to cross the midline, often used to determine the transition between bullish and bearish bias.

Details

The Stochastic Momentum Index (SMI) is a refinement of the traditional stochastic oscillator that measures the distance of the current closing price relative to the median of the high/low range. This script reverse-engineers the SMI calculation to solve for price. It employs two primary functions: one to find the price for a specific SMI scale value and another to find the price for a signal line crossover. To ensure chart stability, a filter is applied to replace any theoretical negative price results with zero, preventing auto-focus issues on the Y-axis.

Settings

SMI Properties

• Price Source: Determines the price data used for the SMI calculation (default is Close).
• SMI Length: The lookback period for the high/low range.
• Smooth 1: The first EMA smoothing period applied to the SMI.
• Smooth 2: The second EMA smoothing period applied to the SMI.

SMI Line Plot Settings

• Show SMI eq: Toggles the display of the SMI equality price line.
• Color Type: Choose between a single color or dual colors based on rising/falling momentum.

Signal Line Plot Settings

• Show Signal Line Crossover: Toggles the projection of the signal line crossover price.
• MA Length: The moving average length used to calculate the SMI signal line.

Scale Settings

• Alert Hi/Lo: Sets the specific SMI values to project onto the chart (e.g., +40 and -40).
• Mid-line: Sets the center point for projection (usually 0).

Info Box Settings

• Show Info Box: Toggles a labels-based dashboard on the right side of the chart.
• Show Alert Levels Info: Adds the specific price requirements for alert levels into the dashboard.

FAQ

How do I interpret the projected lines?

The lines represent the "target" price for the current candle. If price closes above a projected level, the corresponding SMI event (like a signal line cross) will occur on the oscillator.

Can this replace the standard SMI oscillator?

Yes, it provides the same information but translates it into price levels, making it easier to set stop-losses or take-profit orders based on momentum targets.

How can I access Reverse Stochastic Momentum Index On Chart?

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