OPEN-SOURCE SCRIPT
RSI Deviation
Updated
An oscillator which de-trends the Relative Strength Index. Rather, it takes a moving average of RSI and plots it's standard deviation from the MA, similar to a Bollinger %B oscillator. This seams to highlight short term peaks and troughs, Indicating oversold and overbought conditions respectively. It is intended to be used with a Dollar Cost Averaging strategy, but may also be useful for Swing Trading, or Scalping on lower timeframes.
When the line on the oscillator line crosses back into the channel, it signals a trade opportunity.
~ Crossing into the band from the bottom, indicates the end of an oversold condition, signaling a potential reversal. This would be a BUY signal.
~ Crossing into the band from the top, indicates the end of an overbought condition, signaling a potential reversal. This would be a SELL signal.
For ease of use, I've made the oscillator highlight the main chart when Overbought/Oversold conditions are occurring, and place fractals upon reversion to the Band. These repaint as they are calculated at close. The earliest trade would occur upon open of the following day.
I have set the default St. Deviation to be 2, but in my testing I have found 1.5 to be quite reliable. By decreasing the St. Deviation you will increase trade frequency, to a point, at the expense of efficiency.
Cheers
DJSnoWMan06
When the line on the oscillator line crosses back into the channel, it signals a trade opportunity.
~ Crossing into the band from the bottom, indicates the end of an oversold condition, signaling a potential reversal. This would be a BUY signal.
~ Crossing into the band from the top, indicates the end of an overbought condition, signaling a potential reversal. This would be a SELL signal.
For ease of use, I've made the oscillator highlight the main chart when Overbought/Oversold conditions are occurring, and place fractals upon reversion to the Band. These repaint as they are calculated at close. The earliest trade would occur upon open of the following day.
I have set the default St. Deviation to be 2, but in my testing I have found 1.5 to be quite reliable. By decreasing the St. Deviation you will increase trade frequency, to a point, at the expense of efficiency.
Cheers
DJSnoWMan06
Release Notes
~Made some visual changes.~Noticed the indicator has a little counter-trend bias, (more sell triggers than buys in a rising market. etc.) so I made it possible to adjust the band upper and lower individually (asymmetrical).
~Changed some default setting values. MA Length from 200 to 50. St. Deviation from 2.0 to 1.5.
~Added Tooltips to the menu.
Open-source script
In true TradingView spirit, the author of this script has published it open-source, so traders can understand and verify it. Cheers to the author! You may use it for free, but reuse of this code in publication is governed by House rules. You can favorite it to use it on a chart.
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