RSI / STOCH RSI OVERLAY

The RSI / STOCH RSI OVERLAY indicator combines the Relative Strength Index (RSI) and the Stochastic RSI into a single pane to help traders identify momentum shifts and overbought/oversold conditions simultaneously.

Usage

The Usage section focuses on identifying confluence between standard momentum and stochastic momentum. By overlaying these two metrics, traders can look for specific setups:

• Momentum Confluence: When both the RSI and the Stochastic RSI are in overbought (>70/80) or oversold (<30/20) territory, it may signal a potential exhaustion in the current trend.
• Signal Line Crosses: The Stochastic RSI includes K and D lines. A bullish cross (K over D) while the RSI is at a low level can indicate a potential upward reversal.
• Trend Strength: A thick green RSI line remaining above the midline while Stochastic RSI fluctuates can indicate a strong bullish trend where minor pullbacks are being captured by the Stochastic component.

Details

The script executes two distinct calculations. First, it calculates a custom RSI based on the selected length and source. Second, it calculates a Stochastic RSI, which applies the Stochastic formula to RSI values rather than price. This "indicator of an indicator" is designed to be more sensitive to price changes than the standard RSI. The overlay allows users to see the smoothing of the traditional RSI alongside the faster, more reactive signals of the Stochastic RSI.

Settings

• Length: Determines the period used for the main RSI calculation.
• Smooth K: The slowing period for the Stochastic RSI %K line.
• Smooth D: The moving average period used to calculate the %D signal line from %K.
• Stoch RSI Length: The period used to calculate the internal RSI for the Stochastic formula.
• Stoch Length: The period used for the Stochastic calculation applied to the RSI.
• RSI Source: The price data (e.g., Close, Open, High, Low) used as the input for the calculations.

FAQ

How do I interpret the different lines on the chart?

The thick green line represents the standard RSI. The thinner lines (white/orange) represent the Stochastic RSI %K and %D lines.

What do the shaded background areas represent?

The blue shaded area represents the 30-70 range for the standard RSI, while the horizontal levels at 20 and 80 represent the typical thresholds for the Stochastic RSI.

How can I access this tool?

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