OPEN-SOURCE SCRIPT
Actualizado Normalized Candles RSI [Jamallo]
🔹 Intro
The Normalized Candles RSI is a quantitative momentum and volatility indicator designed to transform raw, trending price action into a stationary 0-100 oscillator. By passing price data through a Fractional Differencing engine and a dynamic Z-Score normalization layer, it strips away market drift and presents pure, bounded candlestick momentum. This stationary price structure is then directly overlaid with a traditional RSI and Divergence engine for highly confluent signals.
🔹 Break down
🔹 Visual Guide: Indicator Anatomy
The true power of this indicator lies in its visual mapping. As shown in the snapshot, the indicator pane perfectly merges the structure of raw price action directly with a classic RSI oscillator.
🔹 Settings Parameters
- Diff Order (d) (0.01 - 0.99): The fractional differencing order. Higher values make the series more stationary but remove more historical memory.
- Z-Score Lookback: The rolling window used to calculate the mean and standard deviation for the 0-100 normalization engine.
- Sigmoid Compression Scale: Controls the elasticity of the 0-100 bounds. A higher value results in softer compression at the extremes, while a lower value makes it compress faster.
- RSI Settings & Smoothing: Standard parameters for the RSI length, smoothing moving averages (SMA, EMA, VWMA, etc.), Bollinger Bands, and the divergence lookback constraints.
🔹 Credits & Acknowledgements
The core RSI and Divergence engine utilized in this script is adapted from TradingView's built-in Relative Strength Index indicator code.
The Normalized Candles RSI is a quantitative momentum and volatility indicator designed to transform raw, trending price action into a stationary 0-100 oscillator. By passing price data through a Fractional Differencing engine and a dynamic Z-Score normalization layer, it strips away market drift and presents pure, bounded candlestick momentum. This stationary price structure is then directly overlaid with a traditional RSI and Divergence engine for highly confluent signals.
🔹 Break down
- Fractional Differencing (FFD): Transforms non-stationary price data into a stationary series while retaining deep historical memory (controlled by the "d" parameter). This prevents the data loss associated with standard period-to-period differencing.
- Normalization Engine: Applies a rolling Z-Score to the differenced data, which is then passed through a Sigmoid compression function. This mathematically forces the resulting candlesticks into a strict 0-100 range without repainting.
- RSI & Divergence Engine: Overlays a classic RSI with optional smoothing moving averages and Bollinger Bands. Built-in regular bullish and bearish divergence detection algorithms automatically scan for momentum exhaustion relative to the price.
🔹 Visual Guide: Indicator Anatomy
The true power of this indicator lies in its visual mapping. As shown in the snapshot, the indicator pane perfectly merges the structure of raw price action directly with a classic RSI oscillator.
- 1:1 Structural Mapping: Notice how the normalized candles in the middle pane mirror the raw price action in the main chart exactly (highlighted by the "1:1 with overlay candle sticks" annotation). You get the exact same highs, lows, and structural candlestick patterns, but stripped of drift and mathematically squashed into a stationary box.
- Normalized Candles + Standard RSI: If you look at a standard RSI (bottom pane), you only see a floating line. By overlaying the normalized candles (middle pane), you can see exactly how the physical candlestick bodies and wicks behave relative to the RSI's 0-100 bounds and its smoothing moving average (the yellow line).
- Actionable Context: When a localized top or bottom forms, you aren't just guessing based on a purple line peaking. You can see the actual candlestick structure exhausting itself, forming wicks and reversal patterns right against the upper (70+) or lower (30-) overextended boundaries.
🔹 Settings Parameters
- Diff Order (d) (0.01 - 0.99): The fractional differencing order. Higher values make the series more stationary but remove more historical memory.
- Z-Score Lookback: The rolling window used to calculate the mean and standard deviation for the 0-100 normalization engine.
- Sigmoid Compression Scale: Controls the elasticity of the 0-100 bounds. A higher value results in softer compression at the extremes, while a lower value makes it compress faster.
- RSI Settings & Smoothing: Standard parameters for the RSI length, smoothing moving averages (SMA, EMA, VWMA, etc.), Bollinger Bands, and the divergence lookback constraints.
🔹 Credits & Acknowledgements
The core RSI and Divergence engine utilized in this script is adapted from TradingView's built-in Relative Strength Index indicator code.
Notas de prensa
- Added 4 candle-based alerts on the normalized close- Cross above/below 50 — regime shift signals
- Cross above 70 — overbought
- Cross below 30 — oversold
Script de código abierto
Fiel al espíritu de TradingView, el creador de este script lo ha convertido en código abierto, para que los traders puedan revisar y verificar su funcionalidad. ¡Enhorabuena al autor! Aunque puede utilizarlo de forma gratuita, recuerde que cualquier republicación del código está sujeta a nuestras Normas internas.
Join the Growing (Econophysics Trading) Community! ⚛️
discord.com/invite/qb4RKFdwYJ
Trade the physics of price.
discord.com/invite/qb4RKFdwYJ
Trade the physics of price.
Exención de responsabilidad
La información y las publicaciones no constituyen, ni deben considerarse como, asesoramiento o recomendaciones financieras, de inversión, de trading u otro tipo, proporcionadas o respaldadas por TradingView. Obtenga más información en Condiciones de uso.
Script de código abierto
Fiel al espíritu de TradingView, el creador de este script lo ha convertido en código abierto, para que los traders puedan revisar y verificar su funcionalidad. ¡Enhorabuena al autor! Aunque puede utilizarlo de forma gratuita, recuerde que cualquier republicación del código está sujeta a nuestras Normas internas.
Join the Growing (Econophysics Trading) Community! ⚛️
discord.com/invite/qb4RKFdwYJ
Trade the physics of price.
discord.com/invite/qb4RKFdwYJ
Trade the physics of price.
Exención de responsabilidad
La información y las publicaciones no constituyen, ni deben considerarse como, asesoramiento o recomendaciones financieras, de inversión, de trading u otro tipo, proporcionadas o respaldadas por TradingView. Obtenga más información en Condiciones de uso.