Liquidity Sweeps and RSI Divergence with Trend and ATR Filters
Summary
This strategy combines recent high or low sweeps with RSI divergence and a simple moving average trend filter. A low sweep followed by bullish RSI divergence can trigger a long when price is above the moving average; a high sweep with bearish divergence can trigger a short when price is below it. ATR sets the stop distance, while the stated profit target is twice that distance. The document also lists tunable RSI, lookback, moving average, and ATR inputs.
The published settings specify a one-year daily ETH/USDT futures backtest, but no performance statistics or trade examples are supplied. The source uses recent extrema and RSI comparisons to define divergence, so the signals are mechanical approximations of market structure and institutional activity rather than evidence that large traders caused a reversal. The document notes risks from parameter sensitivity, lag, low liquidity, sharp volatility changes, and sideways markets. Volume confirmation, higher timeframe filters, and adaptive exits are suggestions for future work, not evaluated results.
Key ideas
- A recent high or low sweep is paired with RSI divergence to identify possible reversal entries.
- A moving average filter allows long signals above the trend measure and short signals below it.
- ATR defines the stop distance, and the stated profit target is twice that distance.
- The published backtest settings provide no performance evidence.
- Liquidity sweeps and RSI divergence do not establish that institutional traders caused a market turn.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.