RSI(2) Pullbacks and Rallies Filtered by the 200-Period Trend

Summary

This strategy combines a two-period RSI with five- and 200-period moving averages. The 200-period average sets the directional filter: consider longs when the prior close is above it, and shorts when the prior close is below it. RSI extremes then signal a possible countertrend entry within that broader direction, with a reading below 6 for longs and above 95 for shorts.

Positions exit when price crosses the five-period average in the specified direction. The document also lists optional stop-loss and take-profit settings and suggests EUR/USD on an hourly chart as a starting market and timeframe. It provides rules and parameters but no backtest, performance statistics, or evidence that the suggested configuration is profitable. The approach therefore needs independent testing, including checks of transaction costs, parameter sensitivity, and risk controls before practical use.

Key ideas

• The 200-period moving average determines whether the strategy looks for long or short setups.
• A two-period RSI reading below 6 triggers a long setup when the prior close is above the slow average.
• A reading above 95 triggers a short setup when the prior close is below the slow average.
• The five-period moving average provides the stated exit condition for each direction.
• The document offers configurable stop-loss and take-profit levels but reports no tested results.

Tags

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