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Four-EMA Trend Confirmation with an RSI Entry Filter

Article Strategy library · Author: ianzeng123
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Summary

This long-only trend-following system requires four EMAs, spanning short to long horizons, to align in ascending order. It also requires the close to be above the shortest EMA and a 14-period RSI reading no higher than 60 before entering. A downward crossover of the 21-period EMA below the 63-period EMA closes the position. The description mentions other possible exits, but they are commented out in the supplied strategy logic.

The published implementation uses daily TRX/USD futures data for a backtest period from April 2024 to April 2025. It specifies 10% of equity per trade and a 0.75% commission, but provides no performance results, so its effectiveness cannot be assessed from this material. The approach may enter late because its trend filters use lagging averages, miss strong advances when RSI exceeds the entry ceiling, or exit during a temporary pullback. It does not define short entries, and its fixed settings may behave differently across markets.

Key ideas

  • The entry requires the 9-, 21-, 63-, and 200-period EMAs to be ordered from highest to lowest, with price above the 9-period EMA.
  • A 14-period RSI at or below 60 filters entries that the strategy considers overbought.
  • The active exit is a cross below of the 21-period EMA through the 63-period EMA; other described exits are inactive in the supplied logic.
  • The published setup uses daily TRX/USD futures data, 10% equity sizing, and a stated 0.75% commission, but reports no backtest outcomes.
  • Lagging indicators, fixed parameters, and the long-only design limit the strategy's adaptability.

Tags

FuturesTrend followingTechnical indicatorsRisk managementBacktesting

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