Smoothed RSI Candles with Trend Envelopes

Summary

This indicator applies the relative strength index separately to open, high, low, and close prices, then displays the results as candles. Before calculating the RSI, users can smooth the input prices with a simple, exponential, smoothed, or linear weighted moving average. A smoothing period of one or less disables this step.

Trend Envelopes are applied to the four RSI price series to help assess direction from the resulting candles. The document describes the indicator’s construction and intended interpretation, but provides no backtest, performance measurements, or detailed entry and exit rules. Its suggestion that the envelopes help identify trends is therefore an indicator-use rationale, not evidence of profitability. The author advises experimenting before live use, and the effect may depend on the smoothing method, period, and market.

Key ideas

• The indicator calculates RSI values for open, high, low, and close prices and presents them as candles.
• Input prices can be smoothed with SMA, EMA, SMMA, or LWMA before the RSI calculation.
• A smoothing period of one or less turns off price smoothing.
• Trend Envelopes applied to the RSI candle series are intended to aid trend assessment.
• The document provides no performance evidence and recommends experimentation before live trading.

Tags

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