Trading Price RSI Direction with a Volume RSI Comparison

Summary

This strategy compares a smoothed relative strength index of closing prices with a smoothed relative strength index of volume. The example calculates each RSI over a short lookback and applies a moving average to both. It opens a long position when the smoothed price RSI rises from the previous bar and a short position when it falls; optional exit conditions close each position when that direction reverses. The strategy is configured without pyramiding and sizes entries as a percentage of equity.

The volume-based line is offered as context for judging whether price momentum may be weakening or whether selling pressure appears strong. RSI reference levels are also shown, though they do not govern the stated entry rules. Orders are generated after the triggering condition is observed, with the document explaining that strategy fills occur on the next bar rather than at the signal bar’s close. The author attributes profits partly to the entry-close behavior but supplies no robust performance analysis; results may depend on market, costs, and execution assumptions.

Key ideas

• The strategy smooths separate RSI series calculated from closing price and volume.
• Rising smoothed price RSI triggers long entries, while falling values trigger short entries.
• Optional exits close positions when the smoothed price RSI changes direction.
• The volume RSI is presented as contextual evidence about possible trend strength or weakening.
• The document describes next-bar order timing but does not provide robust evidence of profitability.

Tags

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