Standard Deviation SMA RSI | mad_tiger_slayer

Overview of the Script
The Standard Deviation SMA RSI is a custom TradingView indicator that enhances the Relative Strength Index (RSI) by incorporating a Simple Moving Average (SMA) and Standard Deviation bands. This approach smooths RSI calculations while factoring in volatility to provide clearer trend signals. Additionally, the indicator includes overbought and oversold thresholds, trend-coded RSI signals, and dynamic volatility bands for improved market analysis. This indicator is designed for swing traders and long-term investors looking to capture high-probability trend shifts.

How Do Traders Use the Standard Deviation SMA RSI?

In the provided chart image, the indicator is displayed on a price chart. Each visual component serves a distinct function in identifying trend conditions and volatility levels.

INTENDED USES
⚠️ NOT INTENDED FOR SCALPING
With the smoothing nature of the SMA-based RSI, this indicator is not designed for low-timeframe scalping. It works best on timeframes above 1-hour, with optimal performance in 12-hour, daily, and higher timeframes.

📈 TREND-FOLLOWING & MEAN REVERSION

The Standard Deviation SMA RSI functions as both a trend-following and mean-reverting indicator:

• [] Trend-Following: Identifies strong, sustained trends using RSI signals and SMA confirmation.
  [] Mean Reversion: Detects overbought/oversold conditions based on standard deviation bands and RSI thresholds.
  

A VISUAL REPRESENTATION OF INTENDED USES

• [] RSI Line (Green/Pink/Gray): The RSI line dynamically changes color based on trend conditions.
  
  • [] Green RSI → Strong uptrend, RSI above the uptrend threshold.
    [] Pink RSI → Downtrend, RSI below the downtrend threshold.
    [] Gray RSI → Neutral state or consolidation.
    
  
  • [] If the SMA of RSI is above Long Threshold, the market is in a bullish trend.
    [] If it’s below Short Threshold, bearish conditions prevail.
    
  [] Threshold Lines (Teal/Purple):
  • [] Green Line → Long Entry Threshold
    [] Red Line → Short Entry Threshold
    
  [] Standard Deviation Bands:
  • [] Upper Band → Measures bullish volatility expansion
    [] Lower Band → Measures bearish volatility expansion
    
  [] Colored Candles: Price candles adjust color based on RSI conditions, visually aligning price action with market trends.
  

Indicator's Primary Elements

1. [] Input Parameters
   The script includes several configurable settings, allowing users to tailor the indicator to different market environments:
   
   • [] RSI Length: Controls the number of periods for RSI calculations.
     [] SMA Length: Defines the period for the SMA applied to RSI, creating a smoothed trend line.
     [] Standard Deviation Period: Determines the length for volatility calculations.
     [] Overbought and Oversold Levels:
     • [] Can be adjusted to customize sensitivity.
       

1. [] Standard Deviation SMA RSI Calculation
   The SMA-based RSI smooths fluctuations while the standard deviation bands measure price volatility.
   
   • [] Upper and Lower Bands: Calculated by adding/subtracting standard deviation to/from the SMA-based RSI.
     [] Trend Signal Calculation:
     • [] RSI is compared to uptrend and downtrend thresholds to determine buy/sell conditions.
       

1. [] Long and Short Conditions
   Buy and sell conditions are determined by RSI relative to key thresholds:
   
   • [] Bullish Signal: RSI above long threshold & SMA confirms trend.
     [] Bearish Signal: RSI below short threshold & SMA confirms downtrend.
     [] Reversals: RSI entering overbought/oversold areas suggests possible trend reversals.
     

Conclusion
The Standard Deviation SMA RSI is a powerful trend-following and mean-reverting tool, offering enhanced insights into RSI movements, volatility, and market strength. By combining SMA smoothing, standard deviation bands, and dynamic thresholds, traders can better identify trend confirmations, reversals, and overextended conditions.

✅ Customizable settings allow traders to optimize sensitivity.
✅ Works best on high timeframes (12H, Daily, Weekly).
✅ Ideal for swing traders and long-term investors.