RSI Probability Zones

The RSI Probability Zones indicator projects the most probable price zones based on statistical analysis of RSI behavior patterns. By studying how the RSI historically transitions between key levels, the indicator calculates the probability of price reaching specific zones within a defined projection horizon.

HOW IT WORKS

The indicator divides RSI into meaningful zones and analyzes thousands of historical transitions to build a statistical model. Price zones are obtained through an inverse RSI calculation — given a target RSI level, the indicator computes the exact price that would be required for the RSI to reach that level. Based on the current RSI state, it estimates the probability of the RSI — and therefore price — reaching each zone within the next N bars.

The result is displayed as horizontal price zones on the chart, colored and sized by probability:
• ●●● High probability (≥40%)
• ●●○ Medium probability (≥20%)
• ●○○ Low probability

KEY ZONES

• Overbought (70-80): Price level where RSI reaches overbought territory — potential exhaustion or resistance zone
• Bullish (50-70): Price level associated with positive momentum
• Bearish (30-50): Price level associated with negative momentum
• Oversold (20-30): Price level where RSI reaches oversold territory — potential support or reversal zone

SETTINGS

• RSI Length: Period for RSI calculation (default: 14)
• Historical Bars: Number of bars used to build the statistical model. More bars = more robust statistics, but may include outdated market regimes (default: 500)
• Projection Steps: How many bars ahead to project. Lower values reflect short-term probabilities; higher values converge toward the asset's long-term equilibrium (default: 10)
• Min. Probability: Threshold to display a zone. Increase to show only the most likely zones

HOW TO USE

1. Identify which zones have the highest probability from the current state
2. Use high-probability zones as potential targets or areas of interest
3. Combine with price action, support/resistance and volume for confirmation
4. Adjust projection steps according to your trading horizon:
• Scalping: 1–3 steps
• Intraday: 5–10 steps
• Swing: 10–20 steps

⚠️ DISCLAIMER

This indicator is a statistical tool, not a signal generator. Probabilities are derived from historical data and do not guarantee future results. Always use proper risk management and combine with other forms of analysis.

NOTES

• The statistical model adapts automatically to each asset's unique RSI behavior
• Probabilities are recalculated on every bar using the most recent historical window
• The debug matrix (optional) reveals the full transition probability table for advanced users
• Works on any timeframe and any asset