RSI-2 Oversold Reversal with Moving Average and Fixed Exits

Summary

This document outlines a long-only reversal approach using a 2-period RSI and a 200-period simple moving average. It proposes entering when price closes above the average while RSI is below an oversold threshold, then setting a fixed take-profit and stop-loss relative to an entry reference. The description says to enter at the next session’s open and use the entry day’s low as the reference price; the source code likewise assigns the day’s low to its price variable before calculating the target and stop, then submits an exit on a later bar. These timing and price-reference details can affect whether a backtest is executable in practice.

The stated purpose is to count target and stop hits and assess win rate, but no counts, return series, or other results are supplied. The document cautions that oversold readings may persist, idealized low-price entries may be unattainable, and fixed exits may fail to cover costs. It suggests volatility-adjusted exits, additional trend confirmation, and position management as possible extensions, without testing them.

Key ideas

• The entry setup combines an oversold RSI reading with price above a long-period moving average.
• The described exits use fixed percentage target and stop levels.
• The source uses the buying bar’s low as the reference for those levels, which may differ from a realizable fill.
• No win-rate or profitability results are provided.
• Oversold conditions can persist, and transaction costs may undermine fixed-distance exits.

Tags

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