OPEN-SOURCE SCRIPT
Enhanced Overbought/Oversold Indicator
Enhanced Overbought/Oversold Indicator is a versatile technical analysis tool designed to identify key market conditions where assets are either overbought or oversold. This indicator uses the popular Relative Strength Index (RSI) to highlight potential reversal zones and provide visual cues for traders.
Key Features:
-RSI-Based Analysis: Utilizes the RSI with a 14-period lookback to determine overbought and oversold conditions.
-Multiple Thresholds: Distinguishes between regular overbought/oversold and extreme overbought/oversold levels for more refined analysis:
-Overbought: RSI ≥ 70
-Oversold: RSI ≤ 30
-Extreme Overbought: RSI ≥ 85
-Extreme Oversold: RSI ≤ 15
-Visual Cues with Custom Colors: The background color of the chart changes depending on the RSI level, helping traders quickly identify market conditions:
-Red for overbought
-Blue for extreme overbought
-Green for oversold
-Yellow for extreme oversold
-Candle Color Highlights: Bars are highlighted in green during oversold conditions and in red during overbought conditions, allowing traders to spot these conditions visually on the price chart.
-Overlay Style: The indicator is overlaid on the main price chart, so traders can view overbought/oversold conditions directly on the price action.
How It Helps Traders:
-Profit-Taking: Helps traders identify potential overbought conditions, signaling when to consider taking profits.
-Buying Opportunities: Marks oversold conditions where traders may look for buying opportunities, especially in extreme cases.
-Enhanced Visual Feedback: With its dynamic background color changes and highlighted candles, this indicator gives immediate, easy-to-interpret feedback on market sentiment.
Key Features:
-RSI-Based Analysis: Utilizes the RSI with a 14-period lookback to determine overbought and oversold conditions.
-Multiple Thresholds: Distinguishes between regular overbought/oversold and extreme overbought/oversold levels for more refined analysis:
-Overbought: RSI ≥ 70
-Oversold: RSI ≤ 30
-Extreme Overbought: RSI ≥ 85
-Extreme Oversold: RSI ≤ 15
-Visual Cues with Custom Colors: The background color of the chart changes depending on the RSI level, helping traders quickly identify market conditions:
-Red for overbought
-Blue for extreme overbought
-Green for oversold
-Yellow for extreme oversold
-Candle Color Highlights: Bars are highlighted in green during oversold conditions and in red during overbought conditions, allowing traders to spot these conditions visually on the price chart.
-Overlay Style: The indicator is overlaid on the main price chart, so traders can view overbought/oversold conditions directly on the price action.
How It Helps Traders:
-Profit-Taking: Helps traders identify potential overbought conditions, signaling when to consider taking profits.
-Buying Opportunities: Marks oversold conditions where traders may look for buying opportunities, especially in extreme cases.
-Enhanced Visual Feedback: With its dynamic background color changes and highlighted candles, this indicator gives immediate, easy-to-interpret feedback on market sentiment.
Open-source script
In true TradingView spirit, the author of this script has published it open-source, so traders can understand and verify it. Cheers to the author! You may use it for free, but reuse of this code in publication is governed by House rules. You can favorite it to use it on a chart.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.