[blackcat] L1 Volume-Weighted RSI

OVERVIEW

This script implements a Volume-Weighted RSI (VW-RSI) indicator that enhances traditional RSI calculations by incorporating volume data, providing more accurate momentum signals. The indicator plots a yellow VW-RSI line with customizable overbought/oversold levels and visual background coloring. It automatically generates BUY/SELL labels based on sophisticated crossover conditions, making it a powerful tool for identifying potential trend reversals and market entry/exit points. The script uses Wilder's Moving Average for smoothing and supports various price sources for flexible analysis.

FEATURES

📊 Volume-Weighted RSI Calculation: Incorporates trading volume into RSI calculations for more accurate momentum signals
🔧 Customizable Parameters: Adjustable RSI length (1-100), overbought/oversold levels, and price source selection
🎯 Visual Signals: Automatic BUY/SELL labels appear when specific crossover conditions are met
🎨 Visual Enhancements: Color-coded background (red for overbought, green for oversold) and reference lines
📈 Multiple Timeframe Support: Works across different timeframes with a max bars back setting of 5000
🔄 Sophisticated Logic: Combines multiple crossover conditions for reliable signal generation
HOW TO USE

Add to Chart: Add the indicator to your TradingView chart by searching for "L1-VW-RSI"
Configure Settings: Adjust the input parameters in the settings panel:
Price Source: Select your preferred price calculation (hl2 by default)
RSI Length: Set the lookback period (default: 34)
Overbought Level: Set the overbought threshold (default: 70)
Oversold Level: Set the oversold threshold (default: 30)
Interpret Signals:
Watch for BUY labels when the VW-RSI crosses above oversold levels
Watch for SELL labels when the VW-RSI crosses below overbought levels
Confirm with Volume: Pay attention to volume spikes when signals appear for confirmation
LIMITATIONS

The indicator may produce false signals in sideways or low-volume markets
Signals are based on historical price and volume data only
The script has a maximum of 500 labels to prevent performance issues
Wilder's Moving Average calculation may lag significantly during high volatility periods
The crossover logic combines multiple conditions which may occasionally conflict
NOTES

This script is designed for educational and analytical purposes only. Always use proper risk management when trading.
The default RSI length of 34 is optimized for most trading scenarios but can be adjusted based on your trading style.
For best results, combine this indicator with other technical analysis tools and price action confirmation.
The volume-weighted approach provides more reliable signals in high-volume environments.