Trend - No Trend Challenge

["Carl Soderholm" <Carl@xxxxxxxxxxxx>]

One oscillator worth a look is a smoothed RSI. I like to use a two period
average of a 7 bar RSI. Extreme levels of this oscillator often mark
significant highs and lows. Have a look at http://www.linkshore.com/ and
click on technical indicators on the left side menu. The chart shows the
indicator and a ShowMe study based on it. Note that about half the time the
ShowMe balls are uncannily perched on a significant high or low. The
remaining half mark consolidation or (worse still) nothing at all as the
market blows right through.

Some of the recent postings seem to indicate that using ADX, moving
averages etc. it is easy to determine if a market is trending. If that is
so, it should be easy to filter this oscillator to give signals only when a
market is not trending and likely to change direction.

Perhaps the indicator actually requires the market to be trending to reach
an extreme reading. Is there another way to reduce the number of bad
signals? If there is a way to improve these signals I'd sure like to hear
about it.

Here are the studies or get the ELA files from the web site:

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{RSI Average Indicator
This indicator is an oscillator using an average of RSI.}


Input: RSILen(7), AvgLen(2), Trig(80), Price(C);


Plot1(Average(RSI(Price,RSILen),AvgLen),"Avg RSI");
Plot2(Trig,"Hi Trigger");
Plot3(100 - Trig,"Low Trigger");
Plot4(50,"Center Line");
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{RSI Average ShowMe
This ShowMe study will mark bars where the Average RSI indicator has turned
lower from extremely high levels (crossed below Trig), and bars where the
indicator has turned up from extremely low levels (crossed above 100 -
Trig.) }

Input: RSILen(7), AvgLen(2), Trig(80), Price(C);

Value1 = Average(RSI(Price,RSILen),AvgLen);


If Value1 crosses below Trig then begin;
  Plot1(High,"Down Trig");
  IF CheckAlert Then Alert = TRUE;
End;


If Value1 crosses above (100 - Trig) then begin;
  Plot2(Low,"Up Trig");
  IF CheckAlert Then Alert = TRUE;
End;

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Carl