Price and Volume RSI Smoothing for Directional Trading Signals

Summary

This strategy smooths two Relative Strength Index series: one calculated from closing prices and one from volume. It uses a moving average of price RSI as its trading trigger: rising values open or maintain a long position, while falling values open or maintain a short position. The smoothed volume RSI is plotted alongside it as a visual aid for comparing volume momentum with price momentum and spotting possible weakening in a trend.

The script sets both RSI lookbacks to nine bars and both smoothing windows to five bars by default. It includes overbought and oversold reference levels, but the described entry and exit rules depend on whether the smoothed price RSI is rising or falling, not on crossing those levels. The document offers no backtest results or market-specific evaluation. It also gives no explicit stop-loss, position sizing, or transaction-cost treatment, so the plotted volume comparison should be read as context rather than a validated confirmation rule.

Key ideas

• The strategy calculates RSI separately from closing price and trading volume.
• A five-period moving average of price RSI determines directional entries and exits based on its slope.
• The smoothed volume RSI is used for visual comparison with price momentum.
• Overbought and oversold guide lines are plotted, but they do not define the stated trade triggers.
• No performance evidence or explicit risk controls are provided.

Tags

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