A Short-Horizon RSI Divergence Signal with Volume Filtering

Summary

The article explains an RSI divergence indicator that avoids confirmed pivots. Instead, it compares the current price and RSI with extremes from an earlier short window, then requires elevated volume and an RSI extreme before marking a bullish or bearish signal. This design can produce a signal at bar close without pivot confirmation delay, but the selected earlier extreme may not be a true swing point, so the pattern is a short-horizon exhaustion signal rather than a conventional, longer-term divergence.

The article also explains a momentum-acceleration condition and criticizes it as difficult to justify and partly redundant with the higher-low or lower-high test. It describes how the logic can be translated between charting platforms, including display differences, but gives no backtest or evidence of profitability. The combined filters may make signals scarce, limiting conclusions from small samples; the suggested next step is to test the filters and parameters rather than assume the indicator works.

Key ideas

• The signal compares the current bar with an extreme from a prior rolling window instead of confirmed pivots.
• A volume threshold and overbought or oversold gate filter the divergence conditions.
• The rolling-window anchor may not be a swing point, which limits the signal to short-term exhaustion patterns.
• The RSI acceleration condition is not part of the divergence definition and may be redundant.
• Compounded filters can produce few signals, making small backtests inconclusive.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.