🚀Ehler's RocketRSI by Cryptorhythms

11 dic 2018

🚀Ehler's RocketRSI by Cryptorhythms

This indicator does require some tinkering in cases to line up the waveforms. Here on the 4Hr I have used an RSI LB of 14 and SSF LB of 10.

Personally I find its better at picking short entries when the indicator is topping out. For bottoms it a bit less effective.

I do not use this indicator by itself, but rather as another tool when looking for short entries.

Description

The RocketRSI is an indicator that combines the approach used in the calculation of the Relative Strength Index (RSI) with some principles of signal processing and was developed by John Ehler. By smoothing out noisy price data and singling out a cyclic component within it, the indicator can be used for analysis of cyclic reversals, which could potentially signal trading
opportunities.

The calculation of the RocketRSI is as follows:

• A close price change (momentum) from a past value is found for each bar. The offset between the current and the past price is constant.
  
  
• The values found are run through Ehler
  s 3-Pole SuperSmootherFilter to eliminate the noise.
  
  
• The algebraic sum of one-bar changes in the filtered values is divided by the sum of absolute values of the same changes. The output of this step is limited to be in the range from -0.999 to +0.999.
  
  
• The result is run through the Fisher transform to provide a easily interpreted wave-like output.

If there is a dominant cycle in the input data and the lengths are set correctly, the analysis of peaks and troughs of the output wave may provide valuable sell and buy signals.

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