RSI Divergence Entries with Moving Average Filters and Fixed Exits

Summary

This short-term strategy looks for bullish and bearish divergences between price swings and RSI, then requires RSI to be below 40 for a long or above 60 for a short. RSI uses a configurable period, and the indicator can be smoothed with several moving average types; Bollinger Bands are also offered as a display option. The stated trade management uses fixed stop and target distances, while divergence pivots are identified using price and RSI highs or lows.

The document provides rules and source logic, plus a published one-month BTC/USDT Binance futures backtest configuration. It reports no performance results, so it does not establish profitability. There are material alignment caveats: the prose describes a gold-scalping strategy and a 60-period RSI, while the backtest configuration is for BTC futures and the source converts pip distances using an XAUUSD assumption. The source also plots RSI bands at 40 and 60, not all the levels described in the prose. The document warns that divergences can produce false signals, particularly in ranges or strong trends, and that fixed stops may not suit different markets.

Key ideas

• Bullish divergence requires price to make a lower low while RSI forms a higher low.
• Bearish divergence requires price to make a higher high while RSI forms a lower high.
• The stated entries require RSI below 40 for longs and above 60 for shorts.
• The strategy uses fixed stop and take-profit distances, which may not adapt to changing volatility.
• The published backtest settings do not include performance results, and the asset assumptions differ across the text and source.

Tags

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