Heikin Ashi RSI + OTT

The Heikin Ashi RSI + OTT indicator is a comprehensive momentum and trend-tracking tool that combines the smoothing properties of Heikin Ashi candles with the adaptive filtering of the Optimized Trend Tracker (OTT) applied to the Relative Strength Index (RSI). It aims to provide traders with a cleaner view of market momentum while reducing the noise and whipsaws commonly associated with standard RSI readings.

Usage

The script can be used to identify trend reversals, overbought/oversold conditions, and momentum shifts across two different time horizons (RSI1 and RSI2).

• Heikin Ashi RSI Candles: Unlike standard RSI lines, this tool plots RSI values as Heikin Ashi candles. This helps in visualizing the persistence of momentum. Users can look for color changes in the RSI candles to identify potential shifts in trend.
• Optimized Trend Tracker (OTT): The OTT acts as a dynamic support/resistance channel for the RSI values. When the RSI candles cross and hold above/below the OTT lines, it suggests a confirmed trend direction.
• Dual-Window Analysis: By default, the tool plots two RSI sets (Fast and Slow). Traders can use the "RSI1" for short-term entries and "RSI2" to stay aligned with the higher-order trend.
• Divergences: The indicator automatically detects and plots bullish and bearish divergences between the price action and the RSI calculations, providing early warnings of trend exhaustion.

Details

This script integrates three main technical concepts:

1. Modified Heikin Ashi: The HA calculation is modified to include a "Length" parameter, allowing for additional smoothing of the open, high, low, and close values before they are converted into RSI format.
2. RSI Customization: Users can choose from 14 different moving average types (SMA, EMA, HMA, LSMA, etc.) to calculate the RSI signal, providing significant flexibility compared to the standard Wilder’s RSI.
3. Adaptive Filtering: The Optimized Trend Tracker (developed by Anil Özekşi) utilizes an optimization coefficient to track the RSI volatility, creating a "trail" that filters out minor fluctuations and focuses on sustained momentum.

Settings

RSI & Signal Settings

• RSI Type: Select the moving average method used for the base RSI calculation.
• Length: Sets the lookback period for the RSI.
• Signal Mode: Choose between Simple, Smoothed, or Double smoothing for the signal lines.
• Source: The price data point used for the calculation (default is OHLC4).

Heikin Ashi Settings

• Heikin Ashi Length: Adjusts the smoothing period for the RSI-based HA candles.
• Open HA Mode: Determines how the "Open" value of the candle is calculated (Regular, HA, or Smoothed).

Optimized Trend Tracker (OTT)

• OTT Optimization Coeff: Controls the sensitivity of the OTT trail. Higher values provide a wider berth for volatility, while lower values track the RSI more closely.
• Channel Length: Sets the lookback period for the primary and secondary OTT channels.

Divergences

• Pivot Lookback: Adjusts the sensitivity for identifying peaks and valleys used in divergence detection.
• Lookback Range: Defines the minimum and maximum distance between points to qualify as a divergence.

FAQ

How do I interpret the RSI candle colors? Green candles indicate bullish momentum within the RSI calculation, while red candles indicate bearish momentum. These are smoothed by the Heikin Ashi formula to prevent frequent color flipping.

What is the "OTT Optimization Coeff" used for? It functions similarly to a multiplier in a Supertrend. A value of 1.0 is sensitive, while moving toward 10.0 will make the trend tracker much slower and less reactive to price spikes.

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