Self-Adjusting RSI Levels Using Volatility or Moving-Average Dispersion

Summary

This indicator adapts RSI overbought and oversold thresholds to the recent behavior of the RSI series. It calculates RSI using a configurable period and applied price, then places thresholds symmetrically around the midpoint of 50. The distance from 50 changes with either the standard deviation of RSI or a moving-average measure of its absolute deviations from its own average.

The document describes the formulas and lists five settings: RSI period, applied price, calculation mode, and a deviation multiplier for each mode. It provides no performance tests, trading rules, or empirical comparison between the two adjustment methods. The thresholds are therefore a way to contextualize RSI extremes, not evidence that a particular level predicts reversals. Their behavior depends on the chosen period, mode, and deviation setting, which the document leaves to the user.

Key ideas

• The indicator calculates RSI from a configurable period and applied price.
• Both adjustment methods center the overbought and oversold levels on RSI's midpoint of 50.
• The standard-deviation mode scales the threshold distance using RSI dispersion.
• The moving-average mode uses the average absolute deviation of RSI from its moving average.
• The document explains calculations but provides no performance evidence or guidance for choosing settings.

Tags

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