RSI Hellfire Heatmap Indicator

Chart analysis is all about visualizing data. The RSI hellfire indicator uses a heat-map to visualizes how overbought or oversold the market is on a broad scale. This helps to get a broad picture of the current market setup.

Multiple Time-frame Relative Strength Index

Wells Wilder’s RSI is an old timer of technical indicators. It tries to find out if markets are overbought or oversold. Usually it is calculated using a 14 bar setting. But a 14 bars RSI on a daily chart will give a different reading than 14 bars on an hourly or weekly chart. As it is always nice to see what traders on a different time-frame see on their charts, you could simply display several RSI settings on your chart.

RSI multiple timeframe

RSI multiple time-frame

The chart above shows RSI on a 4h chart, overlaying the daily and weekly RSI. This helps in timing entries and exits on a short time frame without forgetting about the longer term picture.  The code for this kind of multiple time-frame analysis and some ideas on how to interpret the lines will be published soon on WeLoveAlgos.com

RSI hellfire heat-map

Using different time horizons of your technical indicators makes sure that you never trade against the higher time frame, which usually just complicates things in trading.

If you are interested in the complete picture and see all parameter settings of RSI, a heat-map is the thing to use.

Tradesignal Hellfire Indicator

Tradesignal SPY Hellfire Indicator

The chart above color codes all RSI indicators on SPY, from a 3 bar parameter setting up to a 100 bar parameter setting. This way it gives an impression on how short term and long term traders see the markets.

If the chart is coded red, it means that the specific RSI is in the oversold area. Green shows an overbought RSI. The period of the RSI is shown on the left scale of the chart. So, e.g., the chart is red in an area around 10, the RSIs with a period around 10 are oversold.

At the bottom you see the short term overbought / oversold RSI values. At the top of the chart the long term outlook is shown.

Reading the hellfire chart

On the chart below German DAX is shown with the RSI hellfire overlay.

One way to read the chart, it should be quite self explanatory, would be to look for the green areas. That’s where the bulls have control, as no oversold RSI can be seen. As soon as the hellfire starts lightning up at the bottom, the short term RSI values begin to be oversold, roasting the bulls and the party might come to an end. Time to think about an exit strategy.

DAX hellfire heatmap

DAX hellfire heat-map

Another example below: Bitcoin hellfire.

Bitcoin and equity markets are great examples for this kind of analysis, as they tend to show nice bubbles you do not want to miss when trading. But as bubbles burst easily, it is always advisable to have a look at the short term indicator settings too.

Bitcoin hellfire heatmap

Bitcoin hellfire heat-map

By charting all possible indicator settings on your chart you also reduce the risk of over-fitting one specific indicator length to your market. Also see the how to detect curve fitting article.

Hellfire Tradesignal indicator code

If you want to do this analysis by your own feel free to use the attached code. Please keep in mind that it takes some time to calculate all RSI values for all points in history…

Tradesignal RSI hellfire indicator code

Tradesignal RSI hellfire indicator code

All analysis and programming has been done using the tradesignal software