For analyzing , I made a similar indicator based on and , which you can find in the link below.
aggregation method = MA Percent => True RSI: momentum and divergence, failure swings
aggregation method = MA => Absolute Strength Index: accurate momentum and divergence
aggregation method = Cumulative => Awesome Oscillator alternative: momentum and divergence, twin peaks, ... (set the smoothing to 5 and signal length to 29ish)
Smoothing, signal line and histogram to detect trend and choppiness
You can apply additional smoothing to USI. Also, you can add a signal line and histogram (histogram is the difference between main line and signal line). To do so, set the signal length to a number greater than one . Signal line can help you detect changes in trend similar to the signal line on . If signal line criss-crosses USI, it shows market is choppy. The worst case is when this criss-crossing coincides with USI flattening near neutral line and histogram height is relatively short; that means market is ded (until it is not; expansion following a contraction period is a common phenomena)! (Bear in mind that histogram will be hidden in mode, and main and signal lines will be hidden in cumulative mode)
To enable , change the length to a number greater than 1 (default length for the built-in is 14). This length should be calibrated depending on TF and asset. If done correctly, it can be a powerful tool for identifying swings. can be combined with any aggregation method. I recommend using with MA aggregation (i.e. ASI). For conventional uses of , please read https://www.tradingview.com/wiki/Stochas...(STOCH) and https://www.tradingview.com/wiki/Stochas...(STOCH_RSI).
Experimental Bar coloring Feature
There is an option to color bars depending on USI's position relative to the signal line. If both TFs are used in coloring and they are in disagreement, the TF with greater histogram height wins. There are two shades of green and red. The darker shade means both TFs agree. If you use the signal line, bar coloring can help with calibrating the indicator (play with parameters until you see a good looking chart i.e. a lot of green candles followed by a lot of red candles in a row). Please note that bar colors might change until candle(s) close(s). The bar coloring rules will most likely change in the future.
- length N = length 2*N-1
- With correct settings, you can also create an alternative to normalized MACD line in the cumulative mode.
Absolute Strength Index
Please give a like, and share the interesting configurations you find in the comments.
- added safe signal cross similar to the feature in UMACD. This feature is useful to avoid trading during sideways. To use this feature, set the std deviation multiplier option to a number greater than 1.
- changed bar coloring mechanism when both TFs are enabled. Now colors change when both TFs agree, otherwise previous color remains.
- added some visual cues for grouping settings in the UI.
- added an inner band.
I think that (depending on the time frame) 15 & 30 (and -15 & -30) are key levels - as well as 0! There are a lot of nice signals that can be generated by looking at those levels and applying some ideas from the concept of using RSI as a trend following indicator. The screenshot below shows a bunch of notes I made while examining USI - apologies if they're a bit convoluted as they were initially just for me, but thought I'd share them around if anyone finds them useful :)
I have read a book which I forgot the name, it had similar findings to some of the idea you mentioned especially regarding the key levels. I do agree with you re smoothing a bit. It does improve the reading, which is also confirmed in my backtests. They usually give the highest fit with minor smoothing.
I know that Mark Whistler proposes similar use of CCI in "Macro to Micro Volatility Trading" using 4 different CCI lengths of 14, 50, 100 and 200.
This one is like IKEA furniture. u really need to play around with it :D