RSO Indicator
Platform: MT4 Type: Oscillator Last update: September 24, 2024The RSO Indicator for MT4 is based on Relative Strength Oscillator. In other words, the RSO is a variation of the standard forex RSI indicator. The difference between them is that RSO presents its signals in the form of an oscillator line plus histogram bars.
Explaining the RSO
The Relative Strength Oscillator (RSO) is a modified version of the RSI (Relative Strength Index) that serves as an oscillator. The RSI is a widely popular and powerful forex indicator known for its accuracy. It operates on an index scale ranging from 0 to 100. Traditionally, traders would look for RSI values in the 70s or 30s to determine whether to initiate a new position. However, when it comes to forex indicators, symmetry provides better readability and facilitates easier comparisons.
Oscillators typically have a center line, commonly set at 0.0, around which they swing. The RSO serves the purpose of fulfilling this role. Essentially, the RSO is identical to the RSI, with the only difference being a subtraction of 50. As a result, the overbought and oversold positions that were previously represented by values in the 70s and 30s on the RSI are now represented by values of 20 and -20 on the RSO.
In addition to the numerical values, the RSO incorporates colored bars to enhance clarity. Green bars indicate an increase in the RSO, while red bars indicate a decrease. Unlike the RSO or RSI curves, which may not reveal small changes, the colored bars provide a visual representation of these changes. For instance, when the RSO crosses above 20, the first red bar signifies a change in direction. As you can see, the inclusion of colored bars makes the RSO easily understandable at a glance.
Summary
The RSO indicator for MetaTrader 4 is an interesting alternative for the RSI. Basic principles are very similar since the indicator also shows overbougt and oversold levels. The indicator is available for free download and can be effortlessly installed.
