Penguin Trend with RSI on Diff

🐧 Penguin Trend with RSI on Diff

Overview
This is a modified version of the original "Penguin Trend" indicator. Instead of displaying the magnitude of volatility with a histogram, this version uses an RSI oscillator to analyze the "momentum of volatility".

The main goal is to help traders see whether volatility is accelerating or decelerating, while still providing color signals on the price bars to indicate the primary trend direction during periods of volatility expansion.

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How It Works

1. Volatility Difference Calculation
The indicator still calculates the difference value (diff) between the Bollinger Bands and Keltner Channels in the background. This value remains the core component for identifying a Squeeze (consolidation) or a Squeeze Release (volatility expansion).

2. RSI of Volatility Difference
Instead of plotting the diff value as a histogram, this script calculates an RSI based on the diff value. The result is an oscillator line (ranging from 0-100).
This RSI line represents the "momentum" or "rate of change" of the volatility itself.
- A rising RSI indicates that volatility is expanding at an increasing rate.
- A falling RSI indicates that volatility is decelerating or contracting.

3. Bar Coloring
This feature remains identical to the original version. The colors on the price bars are determined by MACD and EMA conditions to reflect the price trend and momentum.
- Lime: Strong bullish trend.
- Red: Strong bearish trend.
- Yellow: Pullback or weakening trend.
Important: The bar colors will only appear during a Squeeze Release (when diff > 0).

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How to Use

1. Analyze Volatility Momentum with the RSI:
- RSI crossing above 50: Signals that volatility momentum is increasing; the market may be starting to trend.
- RSI above 70: Volatility expansion is in an "overbought" state and might slow down soon.
- RSI below 30: Volatility is very low ("oversold"), which could be a precursor to a new volatility expansion.

2. Confirm with Bar Colors:
After observing that the volatility RSI is rising, look for the bar colors on the main chart to confirm a trade.
- Example: If the RSI line crosses above 50 and, at the same time, the price bars turn "Lime", it could be a strong signal to enter a long position.

Tip: This version is ideal for traders who want a deeper analysis of the strength of a volatility breakout. As always, use it in conjunction with other technical analysis tools for confirmation.