Cyclically Smoothed RSI with Adaptive Overbought and Oversold Bands
Summary
The document describes a cyclically smoothed Relative Strength Index (CRSI), intended to adapt RSI signals to market cycles. It begins with upward and downward price changes, smooths them exponentially using a period derived from the estimated dominant cycle, and converts the smoothed movements into an RSI value. A vibration parameter then sets a phase adjustment and recursive smoothing step. The indicator also calculates adaptive upper and lower bands from the recent CRSI range and a leveling percentage, alongside conventional fixed reference levels of 30 and 70.
The text suggests using the bands and shaded area to interpret cyclical extremes and possible reversals or consolidation, and gives default settings plus a ProRealTime implementation. It explains the calculation conceptually but offers no market-by-market tests, return statistics, or evidence that the adaptive bands improve trading outcomes. Results will depend on parameter choices, instrument, timeframe, and cycle estimation; overbought or oversold readings alone do not establish a reversal. The article is therefore a technical indicator description and implementation guide, not a validated strategy or a substitute for risk controls.
Key ideas
- CRSI smooths upward and downward price movements with a factor tied to the estimated dominant cycle.
- A vibration parameter controls phase adjustment and recursive smoothing of the RSI series.
- Adaptive bands are calculated from the CRSI’s recent range and a selected leveling percentage.
- The indicator pairs dynamic bands with fixed RSI reference levels at 30 and 70.
- The document provides an implementation but no evidence that the indicator improves trading performance.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.