RSI and Price Pivot Divergence for Reversal Signals
Summary
This strategy looks for potential reversals by comparing RSI pivot highs and lows with price pivots. Regular bullish divergence pairs a lower price low with a higher RSI low, while hidden bullish divergence pairs a higher price low with a lower RSI low. The bearish cases use the corresponding high pivots. Pivot lookback settings constrain which prior pivots are compared, and the inputs allow the RSI source and plotted signal types to be selected.
The document describes BTC/USDT futures backtest settings over a short historical window but provides no performance results, so it does not establish profitability. Its source enters long positions on either bullish pattern and closes them on a bearish pattern or an RSI threshold event; it does not implement short entries despite describing bearish signals. Pivot confirmation also requires bars after the candidate pivot, which can delay signals. The stated risks include misclassification, difficult hidden-pattern recognition, and sensitivity to lookback choices. Stop-loss use and parameter testing are suggested, but no validated settings are presented.
Key ideas
- Regular bullish divergence combines a lower price low with a higher RSI low.
- Hidden bullish divergence combines a higher price low with a lower RSI low.
- Bearish divergence patterns compare price and RSI pivot highs in the opposite configurations.
- Pivot lookbacks determine which confirmed turning points are compared and can affect signal timing.
- The source trades long on bullish patterns and closes on bearish signals or an RSI threshold, without short entries.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.