RSI MACD Spot Buying Indicator

The RSI MACD Spot Buying Indicator is a technical tool designed to identify high-probability spot buying opportunities by combining momentum and trend reversal signals. It integrates RSI oversold conditions with MACD histogram shifts to pinpoint potential market bottoms in higher timeframes.

Usage

The script is primarily used to identify entry points for spot positions. A "Spot buy" label appears when the following conditions are met:

• Condition 1: The RSI value from the previous candle was in the oversold territory (below 30).
• Condition 2: The MACD histogram shows a reversal, specifically changing from decreasing to increasing (a "hook" or "trough" formation).

In addition to the standard signal, the indicator includes an ATR-MACD filter represented by an upward-facing triangle. This acts as a confirmation signal, indicating that the volatility-adjusted MACD histogram is also trending upward, providing additional confidence in the trade setup.

It is recommended to use this indicator on assets with a long-term bullish outlook. Due to market noise in lower timeframes, the tool is optimized for 12-hour, 16-hour, daily (1D), and weekly (1W) charts.

Details

The indicator relies on the synergy between two classic oscillators:

• Relative Strength Index (RSI): Used to detect when an asset is technically oversold, suggesting a potential exhaustion of selling pressure.
• Moving Average Convergence Divergence (MACD): Used to detect changes in momentum. By requiring the histogram to shift from decreasing to increasing while the RSI is oversold, the script attempts to catch the exact moment momentum begins to shift back to the upside.
• ATR-MACD: This implementation uses an Average True Range (ATR) normalized MACD calculation. By dividing the difference between the fast and slow EMAs by the ATR, the indicator adjusts for volatility, offering a filtered perspective on trend strength.

Settings

MACD Settings

• Fast Length: The period for the shorter-term moving average (default is 12).
• Slow Length: The period for the longer-term moving average (default is 26).
• Source: The price data used for MACD calculations (default is Close).
• Signal Smoothing: The smoothing period for the MACD signal line (default is 9).

RSI Settings

• RSI Length: The lookback period for the RSI calculation (default is 14).
• RSI Source: The price data used for RSI calculations (default is Close).

FAQ

How do I interpret the triangle symbols versus the labels? The "Spot buy" label indicates the primary strategy signal (RSI + MACD). The upward triangle indicates that the ATR-MACD filter has also triggered, suggesting a stronger confluence of momentum and volatility-adjusted trend.

What timeframes are best for this indicator? The indicator is designed for higher timeframes such as 12H, 16H, 1D, and 1W to avoid the "noise" and false signals common in intraday trading.

How can I access the RSI MACD Spot Buying Indicator? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.