Dynamic Zone RSI Indicator MT4 | MT5

The Dynamic Zone RSI indicator is classified as an oscillator that enhances the standard RSI by incorporating dynamic overbought and oversold levels instead of fixed values (such as 30 and 70).

This adaptive approach improves signal accuracy, providing traders with a clearer visual of market conditions and any potential divergence, furthermore, with a middle line between the two levels, it can confirm trend direction. 

• Trend confirmation:

- If the rsi stays above the middle line, it confirms a strong bullish trend.

- If the rsi remains below the dynamic line, it suggests a strong bearish movement.

• Divergences:

- When the price makes lower lows, while the rsi forms higher lows, it signals a potential bullish reversal.

- When the price makes higher highs, while the rsi forms lower highs, it suggests a potential bearish reversal.

• Market condition:

- When the RSI's line rises above the dynamic overbought level, it signals a potential bearish reversal and a sell opportunity.

- When the RSI's line falls below the dynamic oversold level, it signals a potential bullish reversal and a buying opportunity.

1. In the GBPCHF trading example on the MetaTrader 4 chart, when the rsi rebounds from the oversold level, it indicates a potential bullish trend. The middle line has shown an upward movement, confirming the bullish market dominance at that moment. Furthermore, the RSI reaches the overbought zones several times, giving traders sell signals for the correction phases during the uptrend.

When the rsi forms lower highs while the price makes higher highs, suggesting a potential bearish divergence. When the rsi falls below the overbought level, and then below the middle level, signaling a strong short opportunity.

2. In the EURCAD trading example on the MetaTrader 5 chart, when the rsi rebounds from the overbought level, it indicates a potential bearish trend. The middle line showed a downward movement, which confirmed the bearish dominance of the market at that moment. Furthermore, the RSI reaches the oversold zones several times, providing traders with buy signals for the correction phases during the downtrend.

When the price makes lower lows, the indicator forms higher lows, suggesting a potential bullish divergence. When the rsi rose above the oversold level, and then above the dynamic line, signaling a strong long opportunity.