RSI MTF Correlation

RSI MTF Correlation

This indicator detects unusual movement between RSI values on the current timeframe and a higher timeframe (multi-timeframe), generating volatility alerts or identifying potential market phase shifts.

Applying for XAUUSD and BTCUSD.P

How To Read Data



How To Use

When RSI volatility across multiple timeframes behaves abnormally, bar colors shift from gray to orange, blue, or purple, indicating increasing levels of volatility.
Once volatility returns to a normal state (gray), it may signal a potential reversal trade opportunity.

Alert is available in the indicator.

How to Trade

Set alerts using the built-in functions of this indicator, or monitor the chart manually.



When abnormal RSI volatility occurs, bar colors will shift from gray to orange, blue, or purple, reflecting increasing levels of volatility.

Wait until a green or red bar appears to trigger a trade:

• Green bar: signals a potential buy setup
  
• Red bar: signals a potential sell setup
  

Stop-Loss (SL): place below the nearest swing low (for buy) or above the nearest swing high (for sell), typically 20–30 pips.
Take-Profit (TP): follow a Risk-to-Reward ratio of 1:1, 1:2, or ideally 1:5 or higher depending on market structure.

Breakeven adjustment is optional and can be applied according to your trading style and market conditions.

Notice:

1. Follow the higher timeframe trend for more reliable signals.
   
2. Strictly adhere to risk and money management principles.
   

If you experience 2–3 consecutive stop-losses, this may indicate a trend shift or an unclear market condition. In such cases, wait for a new trend to form before re-entering.

How It Works

Under normal market conditions, RSI movements across different timeframes show a relatively correlated pattern.
When this correlation breaks (abnormal RSI volatility), it often signals a possible trend shift in the lower timeframe.

To preserve the dominant trend, the higher timeframe typically pulls the lower one back in line, resulting in sharp V-shaped price movements (flash dumps/pumps).
This behavior helps us identify and isolate abnormal corrections, enabling high-probability trade setups.

However, in some cases, a genuine trend reversal in the lower timeframe can be strong enough to impact the higher timeframe. This may lead to invalidation of trade setups (i.e., stop-loss hits).
We acknowledge this risk and manage it through R:R (risk-to-reward) ratio strategies and robust capital management.

Happy trading ❤️.