The Honey Chai RSI InidcatorHere is a fun new way to view the RSI. A new TradingView Indicator for you RSI enthusiasts. This is the Honey Chai RSI Indicator.
This indicator combines the RSI oscillator with additional features to enhance its functionality and visual study.
The purpose of this indicator is to provide a more comprehensive view of the RSI and aid in identifying trends, potential entry / exit points, and ranging conditions.
How it's Built.
The RSI:
The RSI is represented by its common line which you can turn on and off, as usual.
Japanese candlesticks:
In this indicator, are also Japanese candlesticks giving you their representation of the RSI. This provides a clearer visualization of the RSI movements across its Open, High, Low, and Close, unlike the OHLC of the Heiken Ashi candles in the Heiken Ashi Algo.
In addition to the RSI line and Japanese candles, there are two moving averages applied to the RSI value. For the purpose of keeping with my CoffeeShop theme, the High average line is the Honey Line and the Low average line is the Chai Line. The user can choose between Exponential Moving Average or Simple Moving average. These moving averages are calculated based on the high vs low values of the past RSI readings, with the high average acting as the leading line.
When the Honey line is above theChai Line, it indicates an uptrend, whereas when the Honey Line is below the Chai Line, it suggests a downtrend.
If the price is moving up but the Honey line is still below the Chai line, you're technically still in a downtrend and you should trade this like a pullback.
Identifying Trends.
To identify short entries, you need to wait for the Japanese candles to open and close below the Honey line while the Honey line is below the Chai Line. Conversely, you wait for the Japanese candles to open and close above the Honey line while the Honey line is above the Chai Line. This confirmation helps in identifying potential reversal points.
Range Bound Market.
The indicator also incorporates a visual representation of a ranging area. The 60 and 40 levels of the RSI are visually differentiated to indicate this range. When the Japanese candles are opening and closing within this range and the RSI remains contained within these levels, it suggests that the price is likely in a ranging phase, and traders should wait for a breakout from this range before taking action.
In summary, this custom indicator provides a comprehensive view of the RSI oscillator by incorporating Japanese candlestick visuals, moving averages, and a visual representation of the ranging area. By analyzing these elements, traders can gain insights into trends, potential entry points, and ranging conditions in the market.
All the parts
Downtrend Example
Ranging Market
HOW TO TRADE
LONGS AND SHORTS
An example on how to use this in a long trade is to wait for your moving averages to be high (yellow) over low (orange). For the purpose of the description in this indicator you're looking for the honey to be over the chai.
Even if the RSI and Japanese candles in the oscillator are falling, however the honey is above the Chai, you are still in an uptrend.
The positioning of the moving averages will always determine the direction of the overall price trend so in this position you're looking for long entries.
take a long position as an entry when the open and the close of the Japanese candle in the oscillator is above your honey line.
when you notice a bearish candle closing below the honey line in an uptrend position you can exit your trade.
Confluence for short trades would be just the opposite and using the moving averages in an upside down pattern. In other words the honey needs to be below the chai and your Japanese candle needs to be closing bearish however they open and the close of that candle needs to be below both of your moving averages. exit when you get a bullish candle closing in between the averages.
TRADING RANGES
Wait for your moving average to enter into the range bound 60/40 area as well as your Japanese candles to Wick above and below this area but not close above and below the area.
At this point you can mark off the high and the low of the range as it pertains to your price chart and start using your range trading strategy.
