Combining Connors RSI, Fast RSI, and Candle Filters for Reversals
Summary
This strategy combines Connors RSI, a fast RSI, and candlestick direction to look for countertrend entries when prices appear overbought or oversold. Connors RSI averages a price RSI, an RSI applied to streak length, and a measure based on the ranking of recent returns. The fast RSI is intended to reflect shorter-term price cycles. A candle-body filter screens signals, with bullish candles required for longs and bearish candles for shorts. In combined mode, both RSI measures must meet their respective thresholds; the document also describes separate indicator modes.
Positions are closed when a sufficiently sized candle changes direction, and an optional martingale setting can increase trade size after a loss. The published configuration enables both directions and combined RSI mode, while the backtest settings identify BTC/USDT futures over a limited period. No results or performance statistics are supplied. The author notes risks from failed reversals, choppy conditions, false signals, and parameter choices, and suggests testing filters and stop rules. The candle filter may reduce some false entries but cannot remove these risks.
Key ideas
- Connors RSI combines price RSI, streak RSI, and a recent-return ranking measure.
- Fast RSI adds a shorter-horizon measure to the overbought and oversold conditions.
- Long entries require oversold readings and a bullish candle, while short entries use overbought readings and a bearish candle.
- A reversal in candle direction provides the described exit, and martingale sizing is optional.
- The document gives no performance results and identifies failed reversals and ranging markets as key risks.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.