Super Adaptive RSI [Quantigenics]

Jul 11

The Super Adaptive RSI Indicator is an advanced technical analysis tool designed to measure market momentum and identify potential trend reversals in financial markets. Unlike the traditional RSI indicator, the Super Adaptive RSI adapts to changing market volatility, in real-time, making it more responsive and accurate under various market conditions. The core innovation of this script lies in its dynamic adjustment of the RSI calculation based on the Average True Range (ATR), providing a more nuanced and reliable analysis of market conditions.

Key Features:

1. Adaptive RSI Calculation: Unlike the traditional RSI, the Super Adaptive RSI adjusts its calculation dynamically based on the ATR. This dynamic adjustment makes the indicator more sensitive during high volatility periods and less sensitive during low volatility periods, thereby reducing noise and improving signal accuracy.
   
   
2. Customizable Levels: Users can define the overbought and oversold levels, allowing flexibility based on different trading strategies and asset characteristics. This customization helps traders tailor the indicator to their specific needs.
   
   
3. Visual Alerts: The indicator includes visual alerts for overbought and oversold conditions, aiding traders in making timely decisions. These alerts are triggered when the smoothed RSI crosses above the oversold threshold or crosses below the overbought threshold.
   
   
4. Smoothing Options: The RSI value can be smoothed over a user-defined period, which helps in filtering out market noise and focusing on significant trends. The smoothing is done using a Simple Moving Average (SMA) to provide a clear view of the trend direction.
   

Technical Details:

• ATR-Based Adjustment: The indicator calculates the ATR over a user-defined range (default is the average of a minimum of 3 and a maximum of 8 periods). The length of the RSI calculation is then adjusted based on this ATR value, allowing the RSI to adapt to current market conditions. Specifically, the ATR is used to determine the dynamic length of the RSI, which is recalculated for each new bar.
  
  
• RSI Calculation: The RSI is calculated using the following steps:
  
  1. Net Change Average: This is computed as a running average of the price changes, adjusted by a smoothing factor based on the adaptive length.
  
  2. Total Change Average: This is the running average of the absolute price changes.
  
  3. RSI Value: The RSI value is then derived from the ratio of the Net Change Average to the Total Change Average, scaled to fit within a 0-100 range.
  
  
• Smoothing: The smoothed RSI is obtained by applying a Simple Moving Average (SMA) to the RSI values over a user-defined period (default is 3 periods).
  
  
• Plotting and Visualization: The indicator plots the smoothed RSI along with the overbought and oversold levels on a separate pane. The colors of the RSI line change based on its position relative to these levels, providing immediate visual cues. Additionally, shaded areas are filled to highlight overbought and oversold zones.
  

User Instructions for Configuring the Super Adaptive RSI Indicator:

1. Source (Price): Select the price data that the indicator will use for calculations (default is hlc3 - the average of high, low, and close prices).
   
   
2. Max ATR Length: Set the upper boundary for market volatility analysis, determining the maximum sensitivity of the RSI (default is 8). This influences the dynamic length used in the RSI calculation.
   
   
3. Min ATR Length: Set the lower boundary for market volatility analysis, establishing the minimum sensitivity of the RSI (default is 3). This ensures that the RSI length does not become too short during low volatility periods.
   
   
4. Oversold Level: Define the value at which the asset is considered to be oversold (default is 30). This level helps identify potential buying opportunities.
   
   
5. Oversold Color: Choose a color to represent the oversold condition on the chart, enhancing visual clarity (default is blue).
   
   
6. Middle Level: Set the middle value for the RSI, often used as a neutral zone (default is 50).
   
   
7. Middle Level Color: Select a color for the middle level line on the chart for better visual representation (default is gray).
   
   
8. Overbought Level: Set the point at which the asset is deemed overbought (default is 70). This level helps identify potential selling opportunities.
   
   
9. Overbought Color: Choose a color to represent the overbought condition on the chart, making it easy to identify (default is red).
   
   
10. RSI Smoothing Length: Adjust the smoothing period for the RSI to control the responsiveness of the indicator line (default is 3). A longer smoothing period results in a smoother but less responsive RSI line.
    

How This Indicator Differs from the Traditional RSI Indicator:

The Super Adaptive RSI Indicator is not just another RSI tool. Its unique feature of dynamically adjusting the RSI calculation based on ATR sets it apart from conventional RSI indicators. This makes it particularly useful in volatile markets where static indicators often fail to provide accurate signals. The ability to customize key levels and smoothing options further enhances its utility, allowing traders to tailor the indicator to their specific trading strategies.

By offering a more adaptive and reliable measure of market conditions, this indicator helps traders make better-informed decisions, reducing the risk of false signals and improving overall trading performance. The visual alerts and color-coded RSI line provide immediate feedback, enhancing the trader’s ability to react to market changes.

Although the Super Adaptive RSI Indicator Is an invite-only script we’re offering it at no cost to anyone who wishes to use it.