Adaptive RSI

Adaptive RSI

Adaptive RSI is an enhanced version of the classic Relative Strength Index designed to automatically adjust its behavior to changing market conditions. The indicator can operate both as a mean-reversion oscillator and as a trend-following momentum tool, allowing traders to detect high/low value zones while also capturing directional moves.

Unlike the traditional RSI, which uses a fixed smoothing method, Adaptive RSI dynamically changes its calculation speed depending on market activity. This helps reduce false signals in slow or choppy markets while allowing faster responses during strong moves.

🔍 Concept & Idea

The goal behind Adaptive RSI is to make RSI responsive when opportunities appear and more conservative during uncertain or low-activity environments.

By automatically adjusting its internal smoothing and reaction speed, the indicator attempts to balance:

• Early entries during strong market moves
• Reduced noise during consolidation
• Mean-reversion opportunities in ranging markets
• Momentum confirmation in trending markets

This adaptive behavior makes the oscillator more versatile across multiple market conditions.

⚙️ How It Works

The indicator evaluates market activity using three drivers:

• True Range (volatility)
• Volume activity
• Rate of price change

Users can define which of these factors has priority. The script then checks up to three conditions; the more conditions that are satisfied, the faster and more responsive the RSI calculation becomes.

This creates multiple internal speed tiers ranging from smooth and conservative to highly responsive.

After the adaptive RSI is calculated, an additional adaptive smoothing layer is applied using the same logic, improving signal clarity while preserving responsiveness.

An optional feature allows the RSI to use a special Rate-of-Change weighted price source. This feature is more advanced and mainly intended for users who understand how weighted price construction affects oscillators.

A divergence measure between the base RSI and the smoothed Adaptive RSI is also plotted to help visualize shifts in momentum strength.

⚙️ Key Features

• Adaptive RSI calculation speed
• Works for both trend-following and mean-reversion approaches
• Adjustable long and short signal thresholds
• Overbought and oversold zone highlighting
• Divergence histogram between RSI and adaptive smoothing
• Trend-based coloring and visual signal markers
• Optional ROC-weighted source for advanced users

🧩 Inputs Overview

• RSI calculation length and smoothing length
• Price source selection or optional special weighted source
• Speed tier selection (slow, medium, fast behavior)
• Activity priority order (volatility, volume, momentum)
• Long/short and overbought/oversold thresholds

📌 Usage Notes

• Can be used both for trend continuation and mean-reversion strategies.
• Adaptive logic helps reduce noise during sideways markets.
• Strong moves may cause faster RSI transitions due to adaptive speed selection.
• Signals may update intrabar on lower timeframes.
• Works best when combined with risk management and confirmation tools.
• No indicator is perfect; always test before live use.

This script is intended for analytical purposes only and does not provide financial advice.