RSI Trends and Extremes with Color-Fill
What is the RSI Color Extremes Script?
The RSI Color Extremes Script is a different take on the traditional RSI. With a shorter period setting, short-term trends and extremes can be detected.
How is RSI Color Extremes different from the traditional RSI and Connors RSI (CRSI)?
While the traditional RSI is 14 periods, the default setting for this script is 2 periods. The 2-period setting was borrowed from Connors RSI (CRSI) where 2 and 3 periods are used, however, the interpretation here is different. Credit goes to user fikira as this is a different take on his/her original script. The period setting is adjustable.
How to use the RSI Color Extremes Script
When the RSI(2) crosses above the 70 line, this is a buy signal, when it crosses below the 30 line, this is a sell signal. As the intensity of the green color increases this indicates a strengthening of an up-trend. As the intensity of the red increases, this indicates the a strengthening down-trend. Extremes of above 95, (the red dotted line), or below 5, (the green dotted line) are rarely reached and can be viewed as potential reversal points or proactive profit taking.
This script can be used with other indicators (Stochastic, moving averages, or MACD for examples) for confirmation or confluence of indicators.
Settings:
* The default setting is 2 periods
* color intensity increases as the indicator rises or falls
* The period setting is adjustable.
Observations:
* Not all signals lead to major moves. However, all major moves give this signal. it is important to use other indicators for confirmation.
* setting alerts on the indicator (crossing above 70 or crossing below 30) can be a good way to identify early potential trends.
* The script works on any security and in any timeframe.
The period setting is adjustable.
