RSI Divergence at Extreme Levels with a Higher-Timeframe Trend Filter

Summary

This strategy excerpt detects potential RSI divergence using successive price and RSI pivots. A bearish setup requires price to make a higher high while RSI makes a lower high; a bullish setup requires price to make a lower low while RSI makes a higher low. For either pattern, at least one of the compared RSI pivots must be in or near the corresponding overbought or oversold zone. A maximum lookback limits how far apart the reference pivots may be.

The script also offers a higher-timeframe trend filter based on the prior completed higher-timeframe close relative to an EMA, and plots RSI with configurable extreme thresholds and reference levels. The supplied text cuts off during the divergence section, before showing how signals trigger trades, how exits work, or what results were obtained. Pivot confirmation also uses bars on both sides, so signals are only recognized after the right-side bars have formed. No backtest evidence or risk controls are included in the excerpt.

Key ideas

• Bearish divergence pairs a higher price pivot high with a lower RSI pivot high.
• Bullish divergence pairs a lower price pivot low with a higher RSI pivot low.
• The compared RSI pivots must touch or leave the relevant extreme zone.
• An optional higher-timeframe filter compares the prior close with an EMA.
• The excerpt omits trade execution, exit rules, and performance evidence.

Tags

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