MERGING Stochastic & RSI • Pine Script [OUTDATED V4] Tutorial

hi traders in this lesson I'm going to
show you how to draw the RSI indicator
over the top of a stochastic indicator
by creating our own our a science to
cast ik code so let's get into it start
a blank script here gonna remove this
script going to call this PS MC
stochastic and RSI I'm gonna save these
scripts add it to my chart and we're
good to go so the first thing I want to
do here as always is get my user input
user input and we needed several inputs
here in order to draw a fast stochastic
we need the K input we need the D input
we need an overbought level and we need
an oversold level so I'm going to use
the input function for all of these and
this first input function is going to
get our K length so I'm going to title
this input function K length I'm gonna
give it a type of input integer and a
default value of 14 which is the
standard default for a stochastic
indicator next up we need to get our d
input which is going to be a moving
average of the k variable so here I'm
going to give it a title of d.length a
type of input integer and a default
value of 3 so these are the default
parameters for your standard stochastic
indicator we have a key length of 14 and
a moving average a simple moving average
of the K length of a 3 period moving
average and when we calculate the actual
stochastic this will make sense later on
in the script so next up we need our
overbought and oversold levels so I'm
going to title this over board threshold
and I'm gonna give it a type of input
float and a default value of 80 so you
could set this to integer if you wanted
to but I find that it's better to set it
to a float because then your user can
come up into the settings menu and
change the overbought level or oversold
level
more minutely so you could change this
to 80 point one for example it just
gives you a little bit more control a
little bit more flexibility with your
scripts parameters so I'm just gonna
copy this line of code here and change
this to say oversold and change the
default value for the oversold to 20 so
by default we're using our overbought
and oversold levels as 80 and 20 but you
could change these to whatever you
wanted to nineteen point nine for
example something like that but we'll
leave it as 1820 for now and let's move
on to calculate our stochastic so in
order to do that the stochastic
indicator is similar to the RSI
indicator in that it's an oscillator
that oscillates between a value of 0 and
100 now there's a mathematical formula
for this indicator that's quite simple
you no need to know this and need to
understand what this is or how it works
in order to use it but I like to have a
thorough understanding of all the
indicators that I use and so I will
write out the formula for this
stochastic and it goes a little
something like this 100 times the closed
minus the lowest low over the past 14
candles divided by the highest high over
the past 14 candles minus the lowest low
over the past 14 candles or of course
this 14 could be whatever we set out
k.length to so let's write this out in
prime code so we need to create a new
variable called K and we're gonna set
this to 100 times we need to open a pair
of parentheses here I'm gonna get the
closing price minus the lowest low over
our K input length so by default 14 then
close that parenthesis you don't need to
have these parentheses here in closing
this entire statement this would work
just as well but I like to just for
visuals sake I like to wrap any equation
in parenthesis so I just know for sure
what arithmetic operators are being
executed within these parentheses but
anyway now we need to divide whatever
this result is by
the highest high / out key input length
- the lowest low / our key input length
and I'm just gonna wrap this entire
calculation in a set of parentheses just
so that we know for certain that this
value here whatever this turns out to be
is going to be multiplied by a hundred
here so there's our stochastic formula
that will give us our fast stochastic
next up we need to calculate our D
variable which is simply a simple moving
average SMA this will use the inbuilt
simple moving average function we need
to pass it our K input and our length
which is d input so now we're
calculating a simple moving average of K
based on a three period length and our
user can change this to whatever they
want by changing the D length input
parameter in the settings menu so that's
it we have now calculated how stochastic
I'm gonna get rid of this formula here
just to tidy the script up a little bit
and all that's left now is to draw data
to chart so for this I'm going to plot
out K variable I'm going to give it a
color of color purple I'm gonna give it
a title of K so that we can adjust this
in the settings menu if you want to next
I'm going to plot the D variable here is
D value and it's gonna have a color of
color orange and a title of D then we
need to pluck our over board an oversold
levels so OB level will give it a color
of color dot red and a title of
overbought and I might set the line
width here to two as well just so it's a
little bit thicker and it stands out a
little more on our indicator box and
then finally I'm just gonna copy this
entire line of code paste it down here
change this to oversold level change the
color to green and change our title to
oversold so now we're drawing our
stochastic and if I save these scripts
and we minimize this pine editor there
we go just like magic
we are drawing our stochastic indicator
onto our chart and everything appears to
be working perfectly
so just before I move on I should point
out that you can achieve this
calculation using an inbuilt function in
pine script so I've written this formula
out manually because I thought you guys
might find it interesting how to achieve
this so that if you ever run across an
indicator out there in the wide world of
the internet that pine script doesn't
provide an inbuilt function for you can
just write out the formula yourself but
if we wanted to we could have just used
the inbuilt stochastic function so this
function here takes four input variables
it takes a source a high a low and a
length so we could write in here close
high low and just we could put 14 in
here for a default stochastic length or
just copy our K input into that and now
if I saved these scripts I'll be getting
exactly the same thing drawing onto our
chart but for the purposes of this
demonstration we're just going to leave
this custom formula in just because it
makes this lesson a little bit more
interesting so now if you were to try to
detect setups
whenever the RSI goes overboard or
oversold we'll try to identify
divergences such as this divergence here
you can compare whatever price is doing
to your K variable or your D variable so
if you wanted to detect the market being
oversold you could see if the closing
price is below K or D and then if this
condition is met then you can do a bunch
of other calculations and we're not
going to go into that in this lesson
because this lesson is just about
drawing the stochastic and the RSI which
we'll get to next onto your chart and
I've already shown you how to detect
candlestick patterns and work with
conditions so if you want to make this
more complicated you can go ahead and do
that in your own time but next up before
we finish this lesson let's draw our RSI
on as well so here I'm going to create a
new input variable called RSI length and
we're gonna give it an input title of
our side length a type of input integer
and a default value of 14 so by default
we're gonna calculate the same arrow
sign length as out K and on here I'm
just gonna add and RSI and we're going
to calculate our
using the inbuilt RSI indicator function
which takes two input parameters and
that is a source price so in this case
we're just going to calculate it on the
closing price and we're gonna give it a
length of RSI lengths so by default this
will be a 14 period RSI and now if we
come down here we'll plot the RSI onto
our chart I'll give it a color of color
black and I'll give it a line width too
as well so that it stands down a little
more and we'll give it a title of RSI so
now if I save the scripts we'll be
getting our our side drawn over the top
of our stochastic so that we have it and
just before I finish this lesson I'm
just gonna change the color of this RSI
to red or green based on whether it's
overbought or oversold just so we have
some visual cues of what's going on with
that so here I'm gonna change this to
say is our RSI level greater than our
overbought level question mark then if
this is true then set the color to color
red otherwise is the RSI less than our
oversold level question mark if so and
set the colored color green and if
neither of those conditions are true
then we set the color to black and I
should probably change these to less
than or equal to and greater than or
equal to so if the RSI hits our
overbought or oversold level the color
of the RSI will change color and if I
come to the settings menu change the RSI
length to let's say seven and I save
those settings here we go you can see
that when the RSI goes over bought we
get a red RSI drawing and when it goes
beneath the oversold level it turns
green and there we have it we're done so
that's it for this lesson I hope you
found that helpful if you did and you
want to learn more about Pine scripts
head over to pine skip mastery com here
you'll find my advanced pine script
courses and my basics course which is
free so if you want to learn more about
pine script head over here and you'll
find out a little bit more about me and
a little bit more about pine scripts I
hope you found this lesson interesting
and helpful I'll see you in the next one
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