RSI Highlight

The RSI Highlight indicator is a momentum-based tool designed to visually emphasize when the Relative Strength Index (RSI) crosses into overbought or oversold territories. It aims to improve chart readability by providing clear background fills and optional bar coloring when price momentum reaches extreme levels.

Usage

The Usage of the RSI Highlight script focuses on identifying potential reversal zones or strong trend continuations. When the RSI value exceeds 70, the area between the 70 level and the RSI line is filled with a red color, signaling an overbought condition. Conversely, when the RSI falls below 30, the area between the 30 level and the RSI line is filled with a green color, signaling an oversold condition.

Traders can use these highlights to:

• Identify Extremes: Quickly spot periods where the market might be overextended.
• Confirm Price Action: Use the colored bars on the main chart to correlate RSI extremes with specific candlestick formations.
• Trend Monitoring: Observe how long the RSI remains in highlighted zones to gauge trend strength.

Details

The script calculates a standard Relative Strength Index using the HLC3 (High, Low, Close average) as the source, rather than the traditional Close. It utilizes a Relative Moving Average (RMA) for smoothing, consistent with the original RSI formula developed by J. Welles Wilder.

The visual highlights are achieved through dynamic fills between a static horizontal line (at 70 or 30) and the current RSI value. This provides a more intuitive "depth" to the overbought/oversold reading compared to a standard single-color oscillator. The script also includes built-in alert conditions that trigger when the RSI first enters these extreme regions.

Settings

• Length: Determines the lookback period used for the RSI calculation (Default is 14).
• Bar Colors: Located in the Style tab, this allows users to toggle the coloring of price bars based on the RSI status.

FAQ

How do I use the RSI Highlight indicator?

You can use it to identify overextended market conditions; green highlights/bars suggest oversold levels, while red highlights/bars suggest overbought levels.

Can I change the overbought and oversold thresholds?

In this specific version, the levels are hardcoded at 70 and 30 to maintain the classic RSI interpretation, but the visual styles can be adjusted in the settings.

How can I access RSI Highlight?

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