Idea of making this indicator to capture Bank Nifty Major component and track their movement compared to Bank Nifty.
This indicator should only be used for bank nifty Index or seeing security mentioned below in relation to index.
It includes (ICICI Bank, HDFC Bank, Kotak Bank, Axis Bank, SBI) which together holds 87.56% (as on date) of Bank Nifty weight.
We capitalised their weight in same proportion as if index is made of only 5 script mentioned above,
then Plugged this in RSI formula.
Expectedly this indicator would closely resemble RSI plotted on this particular index, but would help you better entry and exit compared to normal RSI
Another Smooth Moving average is plotted for better decision making.
Take trade when leader show sing of strength / weakness
Happy to have your feedback.
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 a publication is governed by House Rules. You can favorite it to use it on a chart.