It is an RSI oscillator with a smoothing moving average. Four zones are drawn with user selectable colors and opacity. The zone sizes are also user defined.
This will give you a quick visual idea on the location of the RSI, among other things.
It can be combined with other indicators, such Stochastics and CCI, by using Transparent colors for the built in RSI indicator.
March 12th, 2012
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growex
RSI with Volatility Bands formula by Manning Stoller
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Note that one have to adjust the indicator for each market, since each market has a different momentum "mean". The indicator in the picture is adjusted for the CL where it has a pretty good fit. Only on very high momentum should the RSI have a clean breakout of the volatility bands. Otherwise it should as best as possible be fitted so that RSI is accurately "kissing" the bands on high momentum.
Since markets have a tendency to fall quicker than rising, the factor for the lower volatility band should be greater than the upper.
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This indicator takes two moving averages, calculates their RSI (Relative Strength Index) and then also adds a moving average of the calculated RSI. These two lines now can accurately signal the trend changes. They are shown in the separate window where they change from 0 to 100. Additional histogram indicator is shown for quick reference below the lines.
On the picture the bold blue line is RSI of the moving averages, the thin violet line is its moving average. RSI above MA and RSI above level 50 is a signal of a bullish trend. RSI below MA and RSI below level 50 is a signal of a bearish trend. One can also buy when the RSI breaks level 20 from below and sell when RSI breaks level 80 from above, but those are weaker signals. Histogram provides quick reference. Green lines signal BUY, red signal SELL, magenta mean overbought, blue mean oversold.
June 24th, 2015 05:50 AM sam8 Thanks I love it. It helped me out today already
May 28th, 2012 09:10 PM caryn23
August 8th, 2011 11:21 PM leon3456 Very usefull indicator, thanks for sharing
March 8th, 2011 08:21 PM jwhtrades I love this indicator. Would like more info on the color variants. I'm using with PPO and find it a great help. Is th
ere any additional info on it's derivation? Great job!
August 30th, 2010 05:21 AM Trendseek Works also with NT7
Nice Indicator - but the mathematics is a little bit tricky to understand!