RSI Pullback Entries with ATR-Based Stops and Targets

Summary

This long-only system seeks rebound entries after an oversold pullback. It enters when a 14-period RSI crosses above its 14-period simple moving average, provided the prior RSI reading is below a configurable threshold; the stated default is 35. A 14-period ATR sets a stop below the current candle’s low, using a default multiplier of 0.5, and a profit target is placed at a configurable reward multiple, stated as 4 times the stop distance. Chart plots show the entry, stop, and target while a position is open.

The document explains the rules and provides code, but gives no backtest results or performance evidence. It cautions that RSI crosses can fail in sideways markets, parameters may be sensitive, and the long-only design can struggle in falling markets. It also flags the code’s use of the full account equity per trade and notes that gaps, slippage, liquidity, and live execution can produce losses beyond those suggested by the planned stop. Trend filters and more conservative sizing are proposed as refinements.

Key ideas

• Entry requires an RSI crossover above its moving average after the prior RSI reading was below the oversold threshold.
• ATR determines the stop distance below the entry candle’s low, while a reward multiple sets the target.
• The system trades long positions only and is intended to capture rebounds after pullbacks.
• Sideways markets, parameter sensitivity, gaps, and execution costs can weaken results.
• The document flags full-equity sizing as risky and recommends testing and more conservative risk controls.

Tags

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