2008issue C041-10
Rebuild the Relative Strength Index as price-scale bands
RSI bands convert chosen oscillator thresholds into envelopes on the price chart. This archive article restates that construction, the usual 70 and 30 mappings, optional dampening, and an editorial comparison with Bollinger Bands.
- RSI bands ask what price would have to reach today for the Relative Strength Index to sit at a chosen threshold.
- The bands reuse the original RSI calculation, so they can be drawn for any threshold and any lookback, including the usual 70 and 30 mappings.
- Plotting the bands on price makes threshold crossings visible without a separate 0-to-100 oscillator pane.
- Very short lookbacks can make the bands highly volatile, so software can expose an optional dampening input alongside length, oversold, and overbought.
Why map RSI onto price
The Relative Strength Index is a bounded oscillator, typically scaled from 0 to 100, used to mark overbought and oversold conditions from a lookback of price changes. RSI bands are price-scale envelopes that answer what close would be needed today for the Relative Strength Index to sit at a chosen threshold.
Plotting the bands on price is intended to make RSI threshold crossings visible without correlating a separate 0-to-100 oscillator pane.
How the bands are built
RSI bands are constructed by asking what price would have to reach today for the Relative Strength Index to sit at a chosen threshold. Because the bands reuse the original RSI calculation, they can be drawn for any threshold and any lookback period.
Typical overbought and oversold mappings use the 70 and 30 RSI levels as the upper and lower price bands. Those chosen oscillator thresholds can be mapped onto price as upper and lower bands.
Dampening short lookbacks
Very short RSI periods can make the bands highly volatile, and an optional clamping or dampening step is used to stabilize them. Dampening is an optional clamp that reduces the volatility of short-period or extreme RSI bands.
What the software exposes
A software implementation exposes RSI length, oversold, overbought, and an optional dampening input so both raw and damped bands can be plotted. The same RSI-band overlay was implemented as a chart indicator in multiple technical-analysis platforms, including a later desktop release that exposed the parameters in a preferences window.
All readings on this track · 45 readings
- 1992Constructing volatility-scaled bands with relative strength index confirmation
- 1994Implied volatility as a band-defined regime filter for index options
- 1995Constructing projection bands from least-squares slopes
- 1995Constructing regression projection bands and range oscillators
- 1996Constructing Bollinger bands, percent-b, and stochastics
- 1996Constructing mechanical rules from Bollinger Bands and stochastics
- 1996Constructing a standard-error envelope around a linear regression
- 1996Dual-horizon ratio envelopes and regression error channels
- 1997Rational group structure with a trend screen, RSI, and bands
- 1997Asymmetric volatility band construction
- 1998Constructing three-state filters from Bollinger band envelopes
- 1999Combination filters with Bollinger Bands and the relative strength index
- 1999Constructing stochastic timed exits and band-RSI reversals
- 1999Evaluating Bollinger Bands against fixed-width and range-based envelopes
- 2000Constructing a Bollinger Band target as a forward price
- 2001Numeric candlestick encoding with local size bands
- 2001Ranked candlestick sentiment to band-cross entries
- 2002Combining Bollinger Bands, RSI, and a stop-loss
- 2002Bollinger Bands remain filters, not forecasts
- 2002Constructing a stochastic RSI with Bollinger bands
- 2002Constructing a StochRSI and Bollinger mechanical system
- 2003Constructing volatility-scaled Bollinger envelopes
- 2003Why tick breadth fails as a market personality
- 2005Constructing Bollinger bands versus fixed trading bands
- 2006Squared versus absolute deviation in envelope construction
- 2006Confirming yen crossovers with implied volatility and bands
- 2006A daily candle reversal is a hypothesis until shorter sessions fail at the same zone
- 2008Rebuild the Relative Strength Index as price-scale bands
- 2008Reading Relative Strength Index extremes on one price axis with Bollinger Bands and moving averages
- 2011Three-filter confirmation for short-swing futures
- 2011Constructing an inverse Fisher stochastic with bands and averages
- 2012Constructing a Bollinger Band indicator suite
- 2012Stacking price extremes, crossovers, bands, and MACD
- 2012Adaptive Bollinger band impulse, trend, and momentum filters
- 2013Rescaling stochastic, percent-B, and wave-count parameters
- 2014Industry-group quartile pivots as a Bollinger Bands case study
- 2014Bollinger Bands as adaptive price envelopes: a 2014 classroom case
- 2016Trend-channel entry rules from stacked moving averages
- 2016A permission stack for Bollinger, RSI, and the 50-period average
- 2017Constructing weighted Bollinger bands and volume averages
- 2017Four swing-entry rules that share a timed exit
- 2017Two-wave monthly cycles as a regime filter
- 2019Constructing exponential-deviation-bands from a midline-average
- 2020Critiquing exponential variants of Bollinger Bands
- 2020Constructing selectable volatility and moving-average bands