Oversold RSI Bullish Divergence Breakout Strategy

Summary

This long-only strategy looks for bullish divergence after an oversold RSI reading. It identifies two RSI pivot lows within a configurable bar range: the second RSI low must be higher, while the corresponding price low is lower. Once RSI closes above its highest level between those lows, the strategy enters at the next open. It sets a stop around the lowest price since the second low and can target either the intervening swing high or a multiple of risk.

The script exposes settings for RSI length, oversold qualification, pivot confirmation, breakout waiting time, stop buffer, target method, and minimum reward-to-risk. Its rules describe decisions based on closed bars, with an option to allow an earlier confirmation. The supplied excerpt ends before the full implementation and includes no backtest configuration or performance results, so it does not establish profitability. Divergence and breakout signals can fail, and the chosen pivot, stop, and target settings materially affect outcomes.

Key ideas

• The setup pairs a higher RSI pivot low with a lower price low after an oversold condition.
• Entry waits for RSI to break above the highest RSI between the two lows, then buys at the next open.
• The stop is based on the lowest price since the second low, with an optional buffer.
• The target can use the intervening swing high or a risk multiple.
• The excerpt gives configurable rules but no evidence of backtest performance.

Tags

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