Reverse RSI Signals

The Reverse RSI Signals tool inverts traditional Relative Strength Index (RSI) calculations to project overbought and oversold levels directly onto the price chart as dynamic bands. By translating oscillator values into actionable price thresholds, it helps traders visualize exhaustion zones and trend shifts without needing a separate sub-window.

Usage

The indicator features three primary lines: an upper band (RSI 70), a lower band (RSI 30), and a midline (RSI 50). These levels act as adaptive support and resistance that evolve with market volatility.

• Trend Identification: The midline functions as a Supertrend-filtered regime filter. When the candles are colored green, the market is in a bullish regime; when red, the market is in a bearish regime.
• Exhaustion Zones: The gradient-filled bands represent overbought (upper) and oversold (lower) conditions. Traders can look for price rejections or consolidations within these zones to identify potential reversals.
• Divergence Signals: The script automatically detects regular bullish (▲) and bearish (▼) divergences by comparing RSI pivots with price pivots. These non-repainting markers highlight early signs of trend exhaustion.
• Trade Confirmation: In a bullish regime, long setups are often sought near the lower band or upon a bullish divergence. In a bearish regime, short setups are prioritized near the upper band or upon a bearish divergence.

Details

The core logic involves solving the RSI formula for the price variable. This mathematical inversion allows the script to determine exactly what price would be required for the RSI to hit a specific level (e.g., 50, 70, or 30). These levels are then smoothed with an EMA to reduce noise.

The tool further integrates a Supertrend calculation based on the RSI midline. This creates a directional bias, where trend shifts are signaled when the price breaches the midline equilibrium. The divergence logic utilizes a fixed right lookback for faster detection while maintaining signal stability.

Settings

RSI Settings

• Smooth Upper/Lower Bands (EMA): Toggles an EMA filter on the RSI-derived price levels to produce smoother bands.
• RSI Length: The lookback period used for the underlying RSI calculation.
• Source: The price input (e.g., Close, OHLC4) used for all calculations.
• RSI Divergence Lookback: The number of bars used to confirm RSI pivots for divergence detection.

Supertrend

• Supertrend Factor: The multiplier applied to the ATR to determine the width of the midline trend envelope.
• Supertrend ATR Length: The lookback period for the Average True Range used in the trend calculation.

Appearance

• Bullish/Bearish Colour: Customizes the colors for the bands, fills, markers, and trend-shifted candles.

FAQ

How do I interpret the colored candles?

The candle colors represent the current trend regime based on the Supertrend calculation of the RSI midline. Green indicates a bullish bias, while red indicates a bearish bias.

Do the divergence signals repaint?

No, the divergence markers are designed to be non-repainting, appearing after the pivot is confirmed based on the lookback settings.

How can I access Reverse RSI Signals?

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