Combining EMA Trend Filters with RSI Signals

Summary

This document presents a strategy that combines exponential moving averages with the relative strength index (RSI) for commodity futures and digital assets. Its premise is that moving averages can help identify trend direction, while RSI can contribute information about market conditions within that trend. The article also explains the RSI scale and gives a worked calculation, then cautions that buying and selling solely at conventional RSI thresholds may perform poorly. The rules use two EMAs to establish direction and price location, and RSI threshold crossings to trigger entries. The code also includes position exits based on trend reversal and price moves relative to entry, with a configurable stop-loss parameter. It specifies example timeframes and an RSI length, but offers no backtest results, comparison, or evidence of profitability. The thresholds and parameters are therefore examples rather than validated settings, and performance across instruments and market regimes remains unknown.

Key ideas

• The strategy uses two EMAs to define trend direction and price position.
• RSI crossings provide entry signals only when the EMA and price conditions agree.
• The document warns that trading RSI overbought and oversold levels alone may be unreliable.
• Exit rules combine trend changes with price moves measured from the entry price.
• The article supplies implementation logic but no backtest or performance evidence.

Tags

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