Momentum RSI

Momentum RSI (MRSI | MisinkoMaster)

Momentum RSI is an enhanced version of the classic Relative Strength Index (RSI) developed by J. Welles Wilder. This indicator integrates momentum components directly into the RSI calculation, resulting in a faster, smoother oscillator that helps traders identify trend strength and value zones with greater precision.

Unlike the traditional RSI, which relies on a fixed smoothing approach, the Momentum RSI dynamically incorporates momentum derived from differences between moving averages of RSI values over different lookback periods. This improves signal responsiveness while reducing noise, providing clearer insights for both trend-following and mean-reversion trading strategies.

🔍 Concept & Idea

Momentum RSI aims to improve the original RSI by adding momentum elements that speed up its reaction to price changes without sacrificing smoothness. This hybrid approach helps:

Capture early signals in trending markets

Reduce false signals during sideways or choppy conditions

Highlight overbought and oversold zones more effectively

Provide additional momentum context for more informed trading decisions

By combining RSI with momentum derived from moving average differences, the indicator balances sensitivity and stability for a versatile application across different asset classes and timeframes.

⚙️ How It Works

The Momentum RSI calculation involves several key steps:

Standard RSI Calculation:
The indicator first calculates the classic RSI using user-defined length and smoothing parameters. Users can customize the RSI source price and the smoothing moving average (MA) type applied (options include RMA, SMA, EMA, WMA, DEMA, TEMA, HMA, ALMA).

Momentum Derivation:
Two versions of the RSI are computed with different smoothing lengths—a base RSI and a longer smoothed RSI. The difference between their moving averages represents a momentum component that measures the short-term trend strength.

Additional Momentum:
The difference between shorter-length and longer-length RSI calculations adds another momentum layer, reflecting momentum shifts over different timescales.

Momentum Integration:
These momentum components are combined and added to the previous RSI value, resulting in a momentum-enhanced RSI value (mrsi) that oscillates between 0 and 100.

Trend Detection:
Customizable upper and lower thresholds define long and short signal zones, allowing users to interpret when the market is trending bullish or bearish.

Overbought/Oversold Zones:
Additional thresholds highlight extreme value zones for potential mean-reversion trades.

🧩 Inputs Overview

RSI Length - Controls the primary RSI calculation length (default 20).

Source - Selects the price source for the RSI calculation (default: close).

Smoothing Length - Length used to smooth RSI values with the chosen MA type (default 12).

MA Type - Moving average method used for smoothing (options: RMA, SMA, EMA, WMA, DEMA, TEMA, HMA, ALMA).

ALMA Offset - Offset parameter for ALMA smoothing (applicable only if ALMA is selected).

ALMA Sigma - Sigma parameter for ALMA smoothing (applicable only if ALMA is selected).

Upper Threshold - RSI level above which a bullish (long) signal is triggered (default 55).

Lower Threshold - RSI level below which a bearish (short) signal is triggered (default 45).

Overbought Threshold - RSI level indicating overbought conditions (default 85).

Oversold Threshold - RSI level indicating oversold conditions (default 15).

📌 Usage Notes

Versatile Application: Use Momentum RSI for both trend-following and mean-reversion strategies.

Signal Clarity: The momentum integration reduces noise, helping avoid false breakouts and improving entry timing.

Customization: Adjust smoothing lengths and MA types to match the characteristics of your trading style or the specific asset.

Visual Aids: Background colors, candle coloring, and shape markers facilitate quick interpretation of momentum strength and trend changes.

Threshold Sensitivity: Fine-tune thresholds to balance between early signals and signal reliability.

Intrabar Updates: Signals may update on lower timeframes for responsive trading.

Combine with Other Tools: For best results, use Momentum RSI alongside volume, price action, or other confirmation indicators.

Backtest Before Live Trading: Always validate settings on historical data to ensure suitability for your trading instrument and timeframe.

⚠️ Disclaimer

This script is intended for educational and analytical purposes only and does not constitute financial advice. Trading involves risk, and users should perform their own due diligence before making any trading decisions.