The "Zaree - FX Index RSI Indicator" (FIRI) is a technical analysis tool designed to provide insights into the relative strength of two selected currency indices using the Relative Strength Index (RSI). It allows traders to compare the RSI values of a primary currency index and a secondary currency index, helping them identify potential overbought and oversold conditions in the currency market.
Details of the Indicator:
- The indicator calculates the RSI for both the primary and secondary currency indices based on the user's selections.
- Traders can choose from a variety of currency indices to use as the primary and secondary indices for comparison.
- The indicator offers settings for customizing the calculation of the RSI, including selecting the type of moving average (SMA, EMA, WMA, SMMA) and adjusting the length of the RSI and moving average.
- Upper and lower RSI bands are displayed on the chart to highlight potential overbought and oversold conditions.
- The RSI values and their corresponding moving average values are plotted on the chart, allowing traders to visually analyze the relative strength of the indices.
How to Use the Indicator:
- Select the primary and secondary currency indices you want to compare from the provided dropdown menus. These indices will serve as the basis for RSI calculation.
- Choose the type of moving average (SMA, EMA, WMA, SMMA) to use for RSI calculation and set the desired length for the moving average.
- Decide whether you want to visualize the RSI and moving average values for the primary and secondary indices on the chart.
- Observe the RSI values and moving averages plotted on the chart. The indicator's upper and lower bands can help you identify potential overbought (above the upper band) and oversold (below the lower band) conditions.
- Pay attention to the intersections between the RSI values and the moving average lines. These intersections can provide insights into potential trend changes or reversals in the currency market.
Example of Usage:
Let's say you're a swing trader focusing on currency pairs involving the US Dollar (USD) and Euro (EUR). You want to compare the relative strength of the USD Index (USDINX) and the EUR Index (EURINX) to identify potential trading opportunities. Here's how you can use the FIRI indicator:
- Select "USDINX" as the primary index and "EURINX" as the secondary index.
- Choose "SMA" as the moving average type and set the RSI length to 14.
- Enable the visualization of RSI values for both the primary and secondary indices.
- Observe the chart to identify instances where the RSI values of the indices cross above the upper band (potential overbought) or below the lower band (potential oversold).
- Look for intersections between the RSI values and the moving average lines. A bullish signal may occur when the RSI crosses above the moving average, indicating potential upward momentum, while a bearish signal may occur when the RSI crosses below the moving average, indicating potential downward momentum.
Remember that the FIRI indicator is a tool to assist you in your analysis. It's important to consider other technical and fundamental factors before making trading decisions.
Feel free to adjust the settings of the indicator based on your trading preferences and strategy. Keep in mind that no indicator is foolproof, and it's recommended to use the FIRI indicator in conjunction with other analysis techniques for a comprehensive trading approach.
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.