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S2 RSI4

1. PURPOSE

In volatile markets, momentum oscillators often give false signal and sometimes move opposite to price direction. We have made some changes in RSI indicator so it does not move random and catch the price swing effectively.

2. INPUTS

This indicator uses following inputs:

Smooth: Default value is 0.7. We can fiddle this value on the basis of price swing. Use 0.5 for catching a shorter swing and use the default value (0.7) for catching a larger swing.

Upper Band: This input is for the overbought levels. We are advising to use the default value (0.9) for this input.

Lower Band: This input is for the oversold levels. We are advising to use the default value (0.1) for this input.

S2-LegRSI Color: This input helps you to choose the color for the indicator line.

UpperBand Color / Lower Band Color: These two inputs help you to choose the color for the upper Band and Lower band.

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3. HOW TO INTERPRET

S2-RSI4 is an advance oscillator with an adaptive level of overbought and oversold zone. If Oscillator Line (Red Line) is above the Upper Band, it means prices are overbought and will try to make a swing high there.

If Oscillator Line (Red Line) is below the Lower Band, it means prices are oversold and will try to make a swing low there.

An uptrend can be identified when Oscillator Line (Red Line) is moving up and above the lower band whereas a down trend can be identified when Oscillator Line (Red Line) is moving down and below the upper band.

A strong uptrend can be identified when Oscillator Line (Red Line) is remains above the upper band whereas a down trend can be identified when Oscillator Line (Red Line) is remains below the lower band.

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4. OUTPUT

The oscillator has few unique properties which we should look after. These are

Strong Uptrend: When prices cross above the upper band and continuously roam around or above the upper band.

Strong Downtrend: When prices cross below the lower band and continuously roam around or below the upper band.

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Consolidation: When indicator line smoothly move from upper band to lower band and vice versa.

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