Stochastic RSI

Stochastic RSI asks where the current RSI sits inside its own recent range. It is a speeded-up view of an already bounded oscillator. It hits 0 and 1, or 0 and 100, more often than RSI hits 30 and 70. That sensitivity is the feature and the trap. It was described by Tushar Chande and Stanley Kroll.

Because the input is RSI, a small curl in RSI can slam stochastic RSI from one extreme to the other. It is useful when you want an earlier hint that RSI is turning inside its range. It is useless if you read every touch of 1 as a reversal. Those touches are frequent.

A turn up from near 0, while price holds structure, is the bullish use. Confirm with the actual RSI leaving its low, or with price, before you treat the fast line as enough.

A turn down from near 1 is the bearish use, with the same need for confirmation. In a trend, stochastic RSI will peg and reverse many times. Filter with the trend or you will fade every continuation.

Adding it next to RSI and stochastic and counting three confirmations. You have one price series, passed through two smoothers. Also trading it on a timeframe where it flips every bar.

It has no memory of price levels. A reading of 0 can occur in a strong uptrend if RSI briefly dipped inside its own lookback. Look at the chart.