In my opinion, Welles Wilder RSI (Relative Strength Index) is a great momentum oscillator that works fine for small periods values (from 2 to 20).
The proposed RSI
The main idea of the proposed RSI is better detect the signal overbought/oversold situations using larger periods for better trend detection in any timeframe.
For this, I did some changes to it performe as good for greater periods, like 120, introducing a gain variable.
So, if you use 120 period in original Wilder RSI, you can inject a gain to see the graph as well as small periods.
Parameters description:
– period: original RSI period
– gain: gain injected for greater periods better visualization
Example 1: the advantage of larger periods using Wilder RSI gain injection in EUR/USD H1
– in the graph we have the two indicators comparison: Wilder RSI (blue) x Figurelli RSI (red)
– our target is better detect signal points [1] and [4]
– note that original RSI with period 14 detects points [3] and [6] are almost the same, but points [1] and [4] are very differents
– in Figurelli RSI with period 120 and gain 10, we can see points [2] and [5] that better detect the signal overbought/oversold situations
Example 2: the advantage of larger periods using Wilder RSI gain injection in EUR/USD D1
– same as example 1, in the graph we have the two indicators comparison: Wilder RSI (blue) x Figurelli RSI (red)
– our target is better detect signal points [1], [2] and [3]
– note that for Wilder RSI point [1] is oversold, while in Figurelli RSI point [2] is oversold
Adjustment tips:
– if you use gain 1 the Figurelli RSI will be equal to Wilder RSI
– if you increase your period, tries to increase the gain, so for 120 period you can try gain 10 to better see the great Wilder RSI visibility even in greater periods
