EMA Trend Filtering with RSI Hidden Bullish Divergence

Summary

This long-only trend-following strategy combines a 50-period and 250-period EMA filter with RSI hidden bullish divergence. It looks for price to form a higher low while RSI forms a lower low, then checks that the shorter EMA is above the longer EMA and that recent closes remain above the shorter EMA. A stochastic crossover is also required by the supplied source code, although the written overview does not explain this condition. Entry signals can occur several bars after a divergence is detected.

The source describes exits using a recent lowest-low stop and a profit target set as a multiple of the distance to that stop; it also lists an EMA death cross as a reason to close. The published backtest settings specify one-minute BTC/USDT futures data over a short date range, but the document provides no performance results. It cautions that divergence detection and instrument-specific parameter choices can affect signals, and suggests tuning the parameters and adding stop-loss controls. The stated claim of improved accuracy over simpler moving-average methods is not supported here by reported comparative results.

Key ideas

• The strategy uses the relative position of shorter and longer EMAs to filter for an upward trend.
• A hidden bullish divergence is defined as a higher price low alongside a lower RSI low.
• The source code also requires a stochastic crossover and recent closes above the shorter EMA for entry.
• A recent-low stop and a profit target based on stop distance are included in the code.
• The supplied BTC/USDT backtest configuration reports no performance statistics.

Tags

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