Flat_Trend_RSI
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This tool is designed as a visual aid to help traders identify the underlying momentum of a market and filter potential trade entries based on the Relative Strength Index (RSI). Instead of showing standard price movements, it provides a simplified view of "Up" and "Down" trends to help users decide when to take action.
How the Logic Works
The script analyzes price data over a specific period (defaulting to 14 cycles) to determine if the market is experiencing significant strength or weakness. It categorizes these movements into three distinct phases:
1. Trend Identification The tool continuously monitors the RSI value to establish a "trend state."
- If the momentum pushes above a high threshold (70), the system identifies a potential Upward Trend.
- If the momentum drops below a low threshold (30), the system identifies a potential Downward Trend.
2. Filtering for Trade Clarity To prevent traders from entering a position too late or during "noisy" price action, the script applies a secondary filter:
- Upward Trends: For an upward trend to be visually confirmed, the momentum must remain above a mid-point (40). If it falls below this, the signal is cleared.
- Downward Trends: For a downward trend to be visually confirmed, the momentum must stay below a mid-point (60). If it rises above this, the signal is cleared.
Visual Representation
The tool communicates these findings using two distinct visual bars in a separate window:
- UpTrend Signals: These appear when the market shows sustained upward momentum that meets the specific filtering criteria.
- DownTrend Signals: These appear when the market shows sustained downward momentum that meets the specific filtering criteria.
By using this logic, the script acts as a "filter," highlighting only the most reliable trend movements while ignoring minor price fluctuations that do not meet the required strength levels. This helps traders focus on high-probability trends rather than reacting to every small movement in the market.
//+------------------------------------------------------------------+
//| RSIFilter_v1.mq4 |
//| Copyright © 2006, Forex-TSD.com |
//| Written by IgorAD,igorad2003@yahoo.co.uk |
//| http://finance.groups.yahoo.com/group/TrendLaboratory |
//+------------------------------------------------------------------+
#property copyright "Copyright © 2006, Forex-TSD.com "
#property link "http://www.forex-tsd.com/"
//-----
#property indicator_separate_window
#property indicator_minimum -2
#property indicator_maximum 2
#property indicator_buffers 2
#property indicator_color1 DeepSkyBlue
#property indicator_color2 Red
//---- input parameters
extern int PeriodRSI=14;
//---- indicator buffers
double UpBuffer[];
double DnBuffer[];
//+------------------------------------------------------------------+
//| |
//+------------------------------------------------------------------+
int init()
{
string short_name;
//---- indicator line
SetIndexStyle(0,DRAW_HISTOGRAM,STYLE_SOLID,1);
SetIndexStyle(1,DRAW_HISTOGRAM,STYLE_SOLID,1);
SetIndexBuffer(0,UpBuffer);
SetIndexBuffer(1,DnBuffer);
IndicatorDigits(MarketInfo(Symbol(),MODE_DIGITS));
//---- name for DataWindow and indicator subwindow label
short_name="RSI Filter("+PeriodRSI+") (Down trade only when down bars are orange)";
IndicatorShortName(short_name);
SetIndexLabel(0,"UpTrend");
SetIndexLabel(1,"DownTrend");
//----
SetIndexDrawBegin(0,PeriodRSI);
SetIndexDrawBegin(1,PeriodRSI);
//----
return(0);
}
//+------------------------------------------------------------------+
//| |
//+------------------------------------------------------------------+
int start()
{
int shift,trend;
double RSI0;
//----
for(shift=Bars-PeriodRSI-1;shift>=0;shift--)
{
RSI0=iRSI(NULL,0,PeriodRSI,PRICE_CLOSE,shift);
if (RSI0>70) trend=1;
if (RSI0<30) trend=-1;
if (trend>0)
{
if (RSI0 > 40) UpBuffer[shift]=1.0;
else UpBuffer[shift]=EMPTY_VALUE;
DnBuffer[shift]=0;
}
if (trend<0)
{
if (RSI0 < 60) DnBuffer[shift]=-1.0;
else DnBuffer[shift]=EMPTY_VALUE;
UpBuffer[shift]=0;
}
}
return(0);
}
//+------------------------------------------------------------------+
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