Rainbow Oscillator: Weighted RSI, CCI, and Stochastic Reversal Zones

Summary

The Rainbow Oscillator combines RSI, CCI, and Stochastic readings into one weighted oscillator. Users set the RSI and CCI weights, with the Stochastic weight calculated as the remainder. A shared period configures the underlying indicators; optional moving average smoothing can be applied to the oscillator and its levels.

Its reversal zones are dynamic: upper and lower levels derive from oscillator values, using scaled bands and smoothing rather than fixed overbought and oversold thresholds. A persistence factor controls how quickly the levels decay when values move across zero. The illustrated signal logic marks a long when the oscillator crosses back above the outer lower band and a short when it crosses below the outer upper band. The document includes a BTC/USDT futures backtest configuration for a short date range, but provides no performance statistics. It also describes take profit and stop loss inputs without showing how those settings affect the displayed indicator logic, so the material does not establish the strategy’s profitability or robustness.

Key ideas

• The oscillator weights RSI, CCI, and Stochastic values in a single composite measure.
• The Stochastic weight is the remainder after the RSI and CCI weights are set.
• Dynamic upper and lower bands are built from oscillator values and can be smoothed.
• Signals occur when the smoothed oscillator crosses back through an outer band.
• The supplied backtest configuration is limited and gives no reported performance results.

Tags

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