The orange line you are seeing is the "RSI Trend Line"
The further the moves away from a value of 50 (the "zero line"), the more you see this orange line move away from price. This helps visualize the strength of price pushing away from a neutral value to a position of strength or weakness-- if orange is below price then is high; if orange is above price then is low. When price is equal to the orange line, the is at a value of 50.
In addition to the , you can enable bands which reflect Overbought and Oversold levels. If you leave the responsiveness to a value of 1.0 and removed any smoothing, these should pretty accurately reflect an actual chart topping the OB and OS lines (default 70 and 30, respectively). (They're still very close with different responsiveness and smoothing values)
The conversion or scaling of value onto price comes with a bit of a quirk which I decided to leave to the user to determine how they want it applied. So the setting "Responsiveness" will impact the sort of aggressiveness of the as well as the the size of the bands. You could think of this in some ways as the OPPOSITE of the multiple setting on a or band-- 1.0 will make for the widest band, 2.0 is the default and my preference, and you can move it up to a value of 5.0.
Here are some examples of how you could use the indicator for trade signals--
And here's my thought on the current state (as of 10/06) on indices with regards to this indicator-
- If you are trading a stock with an RSI of, say, 80 and you are comparing it to the RSI of SPY which is at 65, your stock has more comparative strength
- The result would be a second line that appears below your RSI trend line
- This line is not enabled by default. I think with this comparative line and the bands enabled a chart can potentially get messy. I'll leave that up to the user to decide if they care for it or not
Here are a couple examples-
Here's the indicator with bands enabled and the new comparative strength line enabled, changed to a dark gray color
Here's the indicator with the comparative line and the bands disabled. Some thoughts on how these 2 can be used to help produce meaningful technical analysis trade signals.
Dentro do verdadeiro espírito TradingView, o autor deste script publicou ele como um script de código aberto, para que os traders possam compreender e checar ele. Um viva ao autor! Você pode usá-lo gratuitamente, mas a reutilização deste código em uma publicação é regida pelas Regras da Casa. Você pode favoritá-lo para usá-lo em um gráfico.
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