RSI Overbought, Oversold, and Divergence Signals

Summary

This indicator colors the Relative Strength Index when it crosses configurable overbought or oversold thresholds and marks potential bullish or bearish divergences. Its default RSI length is 14, with thresholds at 70 and 30; the divergence lookback is configurable and defaults to 90 bars. It also identifies RSI pivot highs and lows and can generate alerts for pivots and divergences.

The divergence logic compares price extremes with RSI behavior, then delays its signal by one candle to reduce repeated alerts. The document provides source code and settings but no reported performance results or detailed validation. It is an indicator script rather than a fully specified trading system: the signals alone do not define position sizing, exits, or transaction costs. Divergence and threshold signals can therefore require separate testing and risk controls before use.

Key ideas

• The indicator highlights RSI readings above an overbought threshold or below an oversold threshold.
• Bullish and bearish divergence signals compare price movements with RSI behavior over a configurable lookback.
• Pivot highs and lows can be displayed or used to trigger alerts.
• The document supplies implementation settings but no performance evidence or complete trade management rules.

Tags

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