This indicator offers a way to trade the RSI drawdown combined together with its value.
Parameters - Lookback. How many candles in the past are used to calculate the drawdown of the RSI - RSI strength and timeframe - Lower and Upper RSI limits. These are used to colour the drawdown chart, the greener the closed to your specified lower limit and the more red the closer to the upper limit. These limits are also used to confirm that the signal occurs with an RSI value within the given limits. - Signal threshold. Buy signals will only be triggered when the drawdown of the RSI is higher than the provided value.
Buy signals The signal will trigger in white color and will plot a 1 to allow backtesting. TradingView alerts can be set for buy signals.
Buy signals will be trigger only when: - RSI value is within the provided lower and upper limit values - RSI drawdown is higher than the provided threshold.
Features - Back-testable (plots 1 for buy) - TV alerts
Chart modes - show RSI - show highest RSI - show RSI drawdown
In the short time I've been playing with this new idea I noticed it can be used both for swing trading and for long term analysis like for example finding market bottoms.
Here's an example setup to find BTC past market cycle bottoms: - load a chart with INDEX:BTCUSD - set the chart timeframe to daily - set the chart to logarithmic scale - zoom out to see the full chart - add the RSI drawdown indicator - use the following parameters in the indicator: timeframe: week, gaps: off, show RSI drawdown: on, lookback:30, length:14, lower: 20, upper: 30: threshold: 40