This indicator uses the concept of slopes and normalizes the values so that they are bounded between 0 and 100. The steps required to calculate the indicator are as follows:
* Calculate the slope of the price using a lookback period (by default, it is either 14 or 21). The slope is calculated by subtracting the current close price from the close price 21 (or 14) periods ago and dividing the result by 21 (or 14). * Calculate the RSI of the slope calculations to get a normalized slope indicator.
The bounded slope indicator can be used the same way as the RSI: * Through oversold and overbought levels. A bullish bias is present whenever the indicator is close to its oversold level (by default, it is 30) and a bearish bias is present whenever the indicator is close to its overbought level (by default, it is 70). * Through the divergence technique. A bullish bias is present whenever the indicator is making higher lows and the market is making lower lows. A bearish bias is present whenever the indicator is making lower highs and the market is making higher highs.
The main advantage of the indicator is its different approach to measuring momentum which can be a good uncorrelated indicator to other classical ones (such as the stochastic oscillator and the MACD).
Nice idea, thanks for sharing, all genius is simple!
longtheshort1
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something Ive been thinking about is combining a group of several spreads/ratio's, and measuring the slope..
Honestcowboy
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Honestcowboy
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Results are extremely positive on a slope distance of 21 with a vwap as trend filter, only look for longs above vwap. These oversold areas are usualy the perfect bottom in trends. This is on Ethereum btw, this would be a great base for an algorithmic trading strategy
Honestcowboy
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I can't seem to find it when looking it up in the indicators tab, maybe pinecoders has to review it before it gets listed.
Interesting concept. Not sure about the divergences as I feel like RSI divergences work just because everyone uses them. The overbought and oversold areas look more promising than on original RSI as it is based on the slope of the market so overbought realy is indicative of a very steep rally. I think this can be used profitably by checking for OB/OS and then look for confirmation of reversal to enter trade.