Adaptive RSI with Smoothed Signals and Automatic Divergence Detection

Summary

This indicator combines a smoothed RSI oscillator, thresholds derived from its recent high and low range, regime coloring, and automatic divergence markings. The described implementation offers several smoothing choices and uses pivot highs and lows to compare price swings with oscillator swings. A higher price high paired with a lower RSI high marks bearish divergence; a lower price low paired with a higher RSI low marks bullish divergence. The indicator also highlights extreme RSI readings and carries the previous regime state while the oscillator lies between its thresholds.

The document presents color changes and divergence near extreme readings as possible trend or reversal clues, but supplies no chart examples, backtests, or evidence of predictive accuracy. Its threshold calculation uses percentages of the rolling oscillator range, so it should not be assumed to compute statistical percentiles. Pivot confirmation also requires subsequent bars, which can delay signals. Treat the settings and suggested entries as hypotheses to test for each market and timeframe.

Key ideas

• The indicator smooths RSI using selectable averaging methods.
• Its adaptive thresholds are calculated from the oscillator’s rolling high-low range.
• Pivot comparisons identify bullish and bearish price-RSI divergences.
• Regime colors show whether RSI has crossed an adaptive threshold.
• The document offers no performance validation, and pivot signals require confirmation bars.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.