RSI Dual-Pivot Divergence Entries with Swing or ATR Risk Controls

Summary

This reversal strategy searches for regular divergence between price and the Relative Strength Index. It identifies RSI pivot highs and lows with a configurable window, then compares each pivot with an earlier one within a specified bar-distance range. A lower price low paired with a higher RSI low signals a potential long; a higher price high paired with a lower RSI high signals a potential short. RSI uses Wilder smoothing and defaults to 14 periods.

For exits, traders can choose stops based on recent swing extremes or on ATR, with profit targets set using a reward-to-risk multiple. The document also describes chart markings and adjustable parameters. It warns that pivot confirmation and RSI can lag, ranging conditions can generate repeated false signals, gaps can bypass stops, and tuned settings may overfit or vary across timeframes. Backtest settings refer to DOGE futures, but the supplied excerpt does not show a complete date range or performance results, so it provides no evidence that the method is profitable.

Key ideas

• Bullish divergence is defined as a lower price low alongside a higher RSI low; bearish divergence reverses that relationship.
• RSI pivots are checked within configurable lookback windows and spacing limits.
• Stops can use recent swing levels or ATR, with targets derived from a selected reward-to-risk ratio.
• Lag, whipsaws, gaps, timeframe variation, and overfitting are cited as risks.
• The published backtest excerpt lacks complete dates and performance statistics.

Tags

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