BB - MFI/RSI [Modified from LazyBear]

The BB - MFI/RSI [Modified from LazyBear] indicator identifies potential overbought and oversold conditions by applying Bollinger Bands directly to Relative Strength Index (RSI) or Money Flow Index (MFI) values. This approach allows traders to visualize the volatility of these oscillators and identify extreme deviations relative to their recent historical average.

Usage

The indicator can be used to identify trend exhaustion or potential reversal points when the chosen oscillator (RSI or MFI) breaches the upper or lower Bollinger Bands.

Typical configurations based on technical analysis standards include:

• RSI Focus: Using a 9-period RSI with a 40-period Bollinger Band (2.0 Standard Deviation) or a 14-period RSI with a 50-period Bollinger Band (2.1 Standard Deviation).
• MFI Focus: Using a 10-period MFI with a 40-period Bollinger Band (2.0 Standard Deviation).

When the RSI or MFI crosses above the upper band, the background can highlight an overbought state. Conversely, a cross below the lower band indicates an oversold state. This helps in comparing short-term oscillator momentum against a longer-term volatility baseline.

Details

This tool is a modification of the original BB-MFI/RSI concept, incorporating specific period settings for Bollinger Bands as suggested in John Bollinger's literature. The primary implementation detail is the application of the Bollinger Band "Basis" (SMA) and "Standard Deviation" to the oscillator data series rather than the price series. This creates dynamic thresholds that adapt to the volatility of the momentum indicator itself.

Settings

• Length: Sets the period for the calculation of the RSI or MFI.
• Multiplier: Defines the standard deviation multiplier used to determine the width of the Bollinger Bands.
• BB Period: Determines the lookback period for the Bollinger Band basis (SMA) and standard deviation calculation.
• Draw RSI?: Toggles the visibility and calculation of the RSI series.
• Draw MFI?: Toggles the visibility and calculation of the Money Flow Index series.
• Highlight Oversold/Overbought?: Enables or disables the background color highlights when the oscillator breaches the bands.

FAQ

How do I use the BB - MFI/RSI [Modified from LazyBear] for signals?

Traders typically look for "S-Turns" or "M-Tops/W-Bottoms" where the oscillator breaches a band and then moves back inside, suggesting a change in momentum direction.

Can I display both RSI and MFI at the same time?

The script is designed to prioritize one oscillator at a time to ensure the Bollinger Bands are calculated accurately based on the visible data series.

How do I access this tool?

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