Multi RSI Smoothed

The Multi RSI Smoothed indicator provides a multi-layered momentum analysis tool that combines three distinct Relative Strength Index (RSI) lengths with EMA smoothing to filter market noise and identify trend reversals. By visualizing multiple timeframes of momentum simultaneously, users can better identify overbought/oversold conditions and potential trend shifts through crossover signals.

Usage

The Multi RSI Smoothed indicator can be used to identify momentum trends and exhaustion points. Traders can look for "Very Overbought" or "Very Oversold" levels, which are highlighted by color changes when the RSI values exceed the configurable thresholds.

Key usage scenarios include:

• Trend Identification: When the shorter RSI (RSI 1) is consistently above the longer RSI (RSI 3), it indicates a bullish trend.
• Crossover Signals: Visual arrows appear when the fast RSI crosses the slow RSI, suggesting potential entry or exit points.
• Mean Reversion: The optional Basis line (derived from the highest and lowest points of RSI 1) serves as a midpoint, helping traders identify when momentum is overextended relative to its recent range.

Details

This script calculates three separate RSI values based on user-defined lengths. Each RSI is then passed through an Exponential Moving Average (EMA) to smooth out erratic fluctuations common in standard RSI plots. The indicator also calculates a "Basis" line for the primary RSI, which is determined by the average of the highest and lowest RSI values over a specific lookback period. Dynamic coloring is applied based on four distinct levels: Very Overbought, Overbought, Oversold, and Very Oversold, allowing for immediate visual feedback on market extremes.

Settings

• RSI 1 Length: The lookback period for the first (fastest) RSI.
• RSI 2 Length: The lookback period for the second (intermediate) RSI.
• RSI 3 Length: The lookback period for the third (slowest) RSI.
• EMA Smooth Length: The length of the EMA used to smooth all three RSI lines.
• Very Overbought: The upper extreme threshold for the primary overbought signal.
• Overbought: The secondary threshold for initial overbought conditions.
• Very Oversold: The lower extreme threshold for the primary oversold signal.
• Oversold: The secondary threshold for initial oversold conditions.
• Show RSI 1 Basis?: Toggles the visibility of the RSI 1 basis line.
• Basis Length: The lookback period used to calculate the high/low average for the basis line.
• Show Crosses?: Toggles the visual arrow shapes that appear during RSI crossovers.

FAQ

How do I interpret the color changes on the RSI lines? The colors change based on your Overbought and Oversold settings. Typically, a distinct color appears when the RSI enters extreme zones (Very Overbought/Oversold), while a secondary color marks the initial Overbought/Oversold boundaries.

What does the Basis line represent? The Basis line represents the midpoint of the RSI's recent range. It can act as a dynamic level of support or resistance for momentum.

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