Purpose of the Relative Strength Index (RSI)
The RSI measures the speed and magnitude of recent price changes to identify overbought or oversold conditions. It’s a momentum oscillator that ranges from 0 to 100, helping traders spot potential reversals or trend confirmations.
How It Works
When you select Relative Strength Index in the Trade Rule block, you can configure it as follows:
RSI Period
The number of candles used for calculation.
Common setting: 14, meaning the RSI is based on the last 14 candles.
Shorter periods = more sensitive; longer periods = smoother.
Advanced Options
Applied Price (Basis for calculation)
Choose which price value is used: Close Price, Open Price, High Price, Low Price, Median Price, Typical Price, Weighted Price.
Time Frame
Select the chart time frame for calculation.
Can be replaced with a variable or input for more flexible backtesting and optimization.
Candle ID
0 – Current forming candle.
1 – Last closed candle (most commonly used for reliable signals).
Higher IDs = older candles.
Adjust
Modify the final RSI value by adding, subtracting, multiplying, or dividing by a number.
Example: Adding +10 shifts the RSI reading upward by 10 points.
Example
If you set:
RSI Period: 14
Applied Price: Close Price
Time Frame: Current
Candle ID: 1
You get the RSI value of the last closed candle, calculated from the closing prices of the past 14 candles.
Use Cases
Identify overbought conditions (RSI > 70) and oversold conditions (RSI < 30).
Spot divergences between price and RSI for potential reversals.
Combine with trend filters to improve accuracy.
⚠ Tip: RSI works well in trending and ranging markets but should be combined with other tools to reduce false signals.