Alpha-Weighted RSI

Description:

The Alpha-Weighted RSI is a next-generation momentum oscillator that redefines the classic RSI by incorporating the mathematical principles of Lévy Flight. This advanced adaptation applies non-linear weighting to price changes, making the indicator more sensitive to significant market moves and less reactive to minor noise. It is designed for traders seeking a clearer, more powerful view of momentum and potential reversal zones.

🔍 Key Features & Innovations:

Lévy Flight Alpha Weighting: At the core of this indicator is the Alpha parameter (1.0-2.0), which controls the sensitivity to price changes.

Lower Alpha (e.g., 1.2): Makes the indicator highly responsive to recent price movements, ideal for capturing early trend shifts.

Higher Alpha (e.g., 1.8): Creates a smoother, more conservative output that filters out noise, focusing on stronger momentum.

Customizable Smoothing: The raw Lévy-RSI is smoothed by a user-selectable moving average (8 MA types supported: SMA, EMA, SMMA, etc.), allowing for further customization of responsiveness.

Intuitive Centered Oscillator: The RSI is centered around a zero line, providing a clean visual separation between bullish and bearish territory.

Dynamic Gradient Zones: Subtle, colour coded gradient fills in the overbought (>+25) and oversold (<-25) regions enhance visual clarity without cluttering the chart.

Modern Histogram Display: Momentum is plotted as a sleek histogram that changes color between bright cyan (bullish) and magenta (bearish) based on its position relative to the zero line.

🎯 How to Use & Interpret:

Zero-Line Crossovers: The most basic signals. A crossover above the zero line indicates building bullish momentum, while a crossover below suggests growing bearish momentum.

Overbought/Oversold Levels: Use the +25/-25 and +35/-35 levels as dynamic zones. A reading above +25 suggests strong bullish momentum (overbought), while a reading below -25 indicates strong bearish momentum (oversold).

Divergence Detection: Look for divergences between the Alpha-Weighted RSI and price action. For example, if price makes a new low but the RSI forms a higher low, it can signal a potential bullish reversal.

Alpha Tuning: Adjust the Alpha parameter to match market volatility. In choppy markets, increase alpha to reduce noise. In trending markets, decrease alpha to become more responsive.

⚙️ Input Parameters:

RSI Settings: Standard RSI inputs for Length and Calculation Source.

Lévy Flight Settings: The crucial Alpha factor for response control.

MA Settings: MA Type and MA Length for smoothing the final output.

By applying Lévy Flight dynamics, this indicator offers a nuanced perspective on momentum, helping you stay ahead of the curve. Feedback is always welcome!