Reverse Cutlers Relative Strength Index

The Reverse Cutlers Relative Strength Index indicator calculates and displays the specific price levels required for the Cutlers RSI to reach targeted values or cross its signal line. By reverse-engineering the RSI formula, this tool helps traders anticipate price action relative to momentum thresholds, providing both a standard oscillator view and a price-level info box for strategic planning.

Usage

The indicator can be used to identify precise price targets that will trigger specific RSI conditions. It is particularly useful for planning entries or exits based on momentum milestones.

• RSI Signal Crossing: Monitor the price level needed for the Cutlers RSI to cross its Moving Average (MA) signal line.
• Zone Transitions: Identify the price required for the RSI to enter Bullish (62-80) or Bearish (0-20) control and critical zones.
• Test Price Analysis: Input a custom "Test Price" in the settings to see what the resulting RSI value would be if the price reached that level.
• Infobox Projections: Use the infobox to view price requirements for the current bar or projected requirements for the next bar.

Details

Unlike the standard Wilder’s RSI, which uses an exponential smoothing method that can lead to initialization errors, Cutlers RSI utilizes a Simple Moving Average (SMA) of gains and losses. This makes the calculation independent of the total data length, ensuring consistent results regardless of how much historical data is loaded. The "Reverse" component of this script applies mathematical inversion to this logic, solving for price rather than RSI.

The RSI scale is segmented into specific zones:

• Bull Critical Zone: 80 - 100
• Bull Control Zone: 62 - 80
• Neutral Midline: 50
• Bear Control Zone: 20 - 38
• Bear Critical Zone: 0 - 20

Settings

RSI Settings

• Input data source: Determines the price source used for calculations (default is close).
• RSI period: The lookback period for the RSI calculation.
• Signal MA period: The lookback period for the signal line moving average.
• MA Type: Choose between SMA or EMA for the signal line.

Plot Settings

• Plot RSI/Signal/Midline: Toggle visibility and customize colors/widths for the main oscillator components.
• Test price: A user-defined price level to calculate a theoretical RSI value.
• Alert level high/low: Custom RSI thresholds that trigger price-level calculations in the infobox.

Infobox Settings

• Info results for: Toggle between "Current bar" (fixed on close) or "Next bar" (real-time projections).
• Show [X] info: Individual toggles for displaying specific price targets (Midline, Zones, Signal Line, etc.) within the box.
• Box offset: Adjust the horizontal position of the information box on the chart.

Levels & Zones

• Scale High/Low/Mid: Define the boundaries for the RSI oscillator scale and neutral point.
• Critical/Control Bull/Bear: Set the custom thresholds for the different market sentiment zones.

FAQ

How do I interpret the projected price for the "Next Bar"? The next bar projections are updated in real-time as the current price fluctuates. They represent the closing price required at the end of the next interval to hit the specified RSI target.

What is the difference between Cutlers RSI and Wilder's RSI? Cutlers RSI uses a Simple Moving Average of upward and downward moves, whereas Wilder's uses an exponential smoothing method. Cutler's version is often preferred for "Reverse" calculations because it avoids data-length dependency issues.

How do I access Reverse Cutlers Relative Strength Index? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.