Comparing Price RSI with RSI of a Volume-Weighted OBV Series

Summary

This indicator plots a conventional RSI of closing prices alongside an RSI calculated from a multi-vote On-Balance Volume series. The OBV component assigns directional votes based on changes in the high, close, and low, averages those votes, weights them by volume, and cumulatively sums the result. It then computes RSI values for both that series and price, plus their difference as a histogram.

The intended use is to compare price momentum with volume-based momentum and inspect divergences, alongside familiar overbought, oversold, and neutral-zone readings. The author says they use it on stock charts above intraday intervals of roughly 15 to 30 minutes, but provides no tested results or trading rules. The code sets the RSI period to 12; implementation details, including a conditional close branch that appears to assign a different variable, may need review. Divergences are interpretive signals and are not evidence by themselves of profitable trades.

Key ideas

• The indicator compares RSI on closing prices with RSI on a volume-weighted OBV series.
• The OBV series aggregates directional votes from changes in the high, close, and low.
• A histogram represents the difference between the two RSI readings.
• The comparison is intended to help identify divergence between price and volume momentum.
• The article gives no trading rules or performance tests, and the code may need checking.

Tags

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