Approach 1. One way to reduce this noise is to use a higher period for the calculation. (say 20 instead of 14 period). In this approach, the valid signal comes quite late.
Approach 2. My unique solution is to use a as the input for the calculation. Usually calculations are based on close value of the candles. If we use an appropriate value, then the signal efficiency will increase.
Using the approach 2, strategies similar to regular can be utilized i.e. breakout, divergence, Hidden divergence.
RSI Colors explained
- GREEN = momentum when >60
- RED = momentum when <40
- BLACK = NEUTRAL market conditions when is between 40 and 60
Recommended default settings: =7 period , =14 period
ADDITIONAL TIP: Works wonderfully with (standard)
I recommended to use on minimum 5 MINUTE timeframe for intraday trades. But you can use different timeframes as well.
Please leave comment below If you have any question or development idea.
1. Candle color changes made. Borrowed the idea from RolandoSantos from his TKP RSI BAR COLOR indicator. The code was simplified to adjust to the RSI conditions.
2. RSI Upper and lower band values can be adjusted using ---> Bullish Bar Color and Bearish Bar Color inputs
Candle Color BLUE ----> side ways market (RSI value is between upper band and lower band values)
Candle Color GREEN ----> bullish market (RSI value is above upper band)
Candle Color RED ----> Bearish market (RSI value below lower band)
TIP: Use Hull Moving Average (200 period) to filter trades.
I hope you like this new update.