Cyclic Smoothed RSI with Motive-Corrective Wave Indicator

The Cyclic Smoothed RSI with Motive-Corrective Wave Indicator tool is a comprehensive momentum and trend analysis suite that utilizes an enhanced version of the RSI to identify market cycles, Elliott-style waves, and price-momentum divergences. It improves upon the standard RSI by incorporating adaptive bands and market vibration smoothing to better track dominant cycle lengths.

Usage

The indicator provides several layers of technical analysis:

• cRSI Analysis: The black line represents the cyclic smoothed RSI, while the purple line (WMA) tracks the general trend of the signal. When the cRSI is above the WMA, the background typically turns green (bullish), and when below, it turns red (bearish).
• Wave Detection: The script attempts to automatically label motive and corrective waves. Motive waves are marked as 's' (strong impulse above the upper band) or 'w' (weak impulse below the upper band). Corrective waves are labeled A through G to help identify retracement phases.
• Divergence Signals: The script identifies four types of divergences: Bullish (cRSI Higher-Low : Price Lower-Low), Hidden Bullish, Bearish (cRSI Lower-High : Price Higher-High), and Hidden Bearish.
• VWMA Overlay: When used in overlay mode, the script can display Volume Weighted Moving Average bands on the price chart to provide additional trend context.

Details

The "core" of this script is based on the Cyclic Smoothed RSI (cRSI) developed by Lars von Thienen. Unlike a standard RSI, the cRSI adapts to market vibration and uses the current dominant cycle length as an input. This implementation specifically focuses on reducing latency by requiring only a minimal lookback for peak detection.

Key features include:

• Adaptive Bands: Upper and lower bands that respond to cyclic memory.
• Wave Logic: Impulse waves are categorized based on their relationship with the cRSI bands, while corrective waves follow a sequential logic (A-G).
• Custom Peak Detection: The indicator uses a specialized lookback mechanism (2 or 3 bars) to detect tops and bottoms, allowing for highly responsive signaling.

Settings

• Use Volume for VWMA: Toggles between using VWMA or a standard WMA if volume data is unavailable.
• VWMA Length: Sets the lookback period for the volume-weighted moving average.
• cRSI Dominant Cycle Length: Controls the persistence of upper/lower bands after a peak.
• cRSI Moving Average Length: Defines the smoothing for the cRSI trend line (purple line).
• cRSI Top/Bottom Detector Lookback: Choose between 2 (more sensitive) or 3 (more robust) bars for peak detection.
• Plotting Toggles: Individual checkboxes to enable or disable Strong/Weak impulse waves, corrective waves, and various divergence types.

FAQ

How do I access Cyclic Smoothed RSI with Motive-Corrective Wave Indicator?

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

Why do I see so many wave labels?

This is usually caused by the "Top/Bottom Detector Lookback" being set to 2. Increasing this to 3 will make the wave detection more robust and filter out smaller, insignificant price fluctuations.

Does divergence mean an immediate reversal?

Not necessarily. Divergence (especially bearish or hidden bearish) often occurs during strong trends where price continues to rise. It should be used as a cautionary signal rather than a standalone entry trigger.