Rainbow Moving Average Trends with Dual RSI Filters

Summary

The strategy builds a seven-line moving average ribbon by smoothing a price series and then repeatedly smoothing the prior average. It labels the trend as rising when the first average sits above the ribbon, falling when it sits below, and sideways when it lies between the ribbon's extremes. Changes into rising or falling states prompt entries, while a sideways state closes positions. Two RSI checks can filter signals: one keeps RSI between overbought and oversold bounds, and another requires momentum outside a middle band.

The settings specify a two-hour BTC/USDT futures test from late August to late September 2023, but no performance evidence is reported. The text notes that false reversals, lag, frequent turnover in ranges, and parameter choices can undermine results. The source closes positions on sideways transitions or filtered trend changes; it does not describe an explicit stop-loss or take-profit rule. Moving average type, spacing, RSI thresholds, timeframe, and instrument are proposed as tuning choices, which require out-of-sample validation.

Key ideas

• Seven successively smoothed moving averages define rising, falling, or sideways states.
• Transitions to rising or falling states generate long or short entries when the RSI filters permit them.
• A sideways state closes positions, and the source also exits when a trend change is filtered out.
• The published test specifies BTC/USDT futures over about one month, without performance results.
• Range-bound churn, delayed signals, false reversals, and parameter sensitivity are key limitations.

Tags

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