MT4 version of original indicator: https://www.mql5.com/en/code/22576 Since the MT4 functionality is limited in the methods of drawing indicators, there are no color zones, but their boundaries are in place.
Basics:
RSI indicator is frequently used in trading decisions coupled with levels checking. Levels are supposed to show if there is overbought or oversold condition. But frequently we are neglecting the fact that the market is adjusting itself to price changes, and that indicators like RSI may actually show overbought and oversold conditions even when the market already adjusted itself.
This version:
It is using the RSI and is constructing an high and low neutral zones using a simple EMA lag – in this case the lag of an average is our ally – without adding that lag, the breakout will never happen. When the RSI crosses the top most or lowest bound, only then consider that a “real” overbought or oversold condition is happening.
