The Original RSI
Hey there, fellow traders!
In my humble opinion, Welles Wilder’s RSI (Relative Strength Index) is a fantastic momentum oscillator that really shines when applied to shorter time frames (think periods ranging from 2 to 20).
The Enhanced Figurelli RSI
Now, let’s dive into the Figurelli RSI. The main goal of this modified RSI is to more accurately pinpoint overbought and oversold signals by utilizing longer periods, which improves trend detection across any timeframe.
To achieve this, I’ve tweaked the setup to work effectively with longer periods, like 120. I introduced a gain variable to enhance performance.
So, if you’re using a 120-period setup with the original Wilder RSI, you can apply this gain to visualize the graph similarly to how you would with shorter periods.
Parameters Breakdown:
- Period: This is the original RSI period.
- Gain: This is the gain injected for better visualization over longer periods.
Example 1: Benefits of Longer Periods with Figurelli RSI on EUR/USD H1
- In this chart, we’re comparing the two indicators: Wilder RSI (blue) vs. Figurelli RSI (red).
- Our aim is to better identify signal points [1] and [4].
- Notice how the original RSI with a period of 14 detects points [3] and [6] quite similarly, but points [1] and [4] show significant differences.
- The Figurelli RSI with a period of 120 and a gain of 10 reveals points [2] and [5], which more effectively highlight overbought/oversold situations.
Example 2: Benefits of Longer Periods with Figurelli RSI on EUR/USD D1
- Just like in Example 1, this chart compares Wilder RSI (blue) and Figurelli RSI (red).
- Our focus here is to better identify signal points [1], [2], and [3].
- You’ll notice that for the Wilder RSI, point [1] is marked as oversold, whereas in the Figurelli RSI, point [2] indicates an oversold condition.
Adjustment Tips:
- If you set the gain to 1, the Figurelli RSI will mirror the Wilder RSI.
- As you increase the period, consider boosting the gain. For instance, with a 120-period, a gain of 10 can help you see the Wilder RSI’s visibility even in longer periods.
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