EMA Crossover and RSI Entries with ATR-Based Stops and Targets

Summary

This strategy pairs a 9-period and 21-period EMA crossover with a 14-period RSI filter. A bullish crossover can trigger a long when RSI is above 30, while a bearish crossover can trigger a short when RSI is below 70. The RSI conditions screen signals around the stated oversold and overbought thresholds; they do not require RSI to cross those levels at entry.

Stops and targets use the 14-period ATR: the stop distance is 2.5 ATR and the target distance is twice that, giving a stated 1:2 risk-to-reward ratio. The document explains the indicator rules and identifies choppy-market whipsaws, slippage, and parameter sensitivity as risks. It provides no reported performance results or backtest evidence. It recommends historical testing and parameter tuning before live use, and suggests possible additions such as trend-strength filters, position sizing, trailing stops, and time filters.

Key ideas

• EMA crossovers define the potential trade direction.
• The RSI filter allows longs above 30 and shorts below 70.
• ATR scales stop and target distances to recent volatility.
• The target distance is twice the stop distance, though realized outcomes can differ.
• Ranging markets, slippage, and parameter choices may undermine performance.

Tags

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