RSI-Volume Momentum Signal Score: Trading the Momentum PressureThe indicator used in this chart is an updated version of the RSI-Volume Momentum Score.
The RSI-Volume Momentum Signal Score is a predictive technical indicator designed to identify bullish and bearish momentum shifts by combining volume-based momentum with the Relative Strength Index (RSI). It generates a Signal Score derived from:
• The divergence between short-term and long-term volume (Volume Oscillator), and
• RSI positioning relative to a user-defined threshold. The Signal Score is calculated as follows:
Signal Score = tanh((vo - voThreshold) / scalingFactor) * ((rsiThreshold - rsi) / scalingFactor)
The logic of this formula are as follows:
• If Volume Oscillator >= Volume Threshold and RSI <= RSI Threshold: Bullish Signal (+1 x Scaling Factor)
• If Volume Oscillator >= Volume Threshold and RSI >= (100 – RSI Threshold): Bearish Signal (-1 x Scaling Factor)
• Otherwise: Neutral (0)
The tanh function provides the normalization process. It ensures that the final signal score is bounded between -1 and 1, increases sensitivity to early changes in volume patterns based on RSI conditions, and prevent sudden jumps in signals ensuring smooth and continuous signal line.
This updated version Introduces colored columns (green and red bars) representing momentum pressure directly. These bars:
o Green bars represent bullish pressure when the signal score is +1.
o Red bars represent bearish pressure when the signal score is -1.
o The transition point from one color to another acts as a visual signal of momentum reversal.
LONG SIGNAL: A transition from green bar to red bar indicates that bullish pressure has reached a tipping point—price is likely to rise soon.
SHORT SIGNAL: A transition from red bar to green bar signals bearish pressure is peaking—potential price drop ahead.
These transitions become intuitive signals for bullish or bearish entries, depending on the context.
