Trading RSI Divergence with Threshold-Based Entries and Exits
Summary
This strategy combines regular RSI divergence with configurable RSI thresholds. It identifies bullish divergence when price makes a lower pivot low while RSI makes a higher pivot low, and bearish divergence when price makes a higher pivot high while RSI makes a lower pivot high. Pivots use left and right bar confirmation, and the prior pivot must fall within a specified bar-distance range.
A long requires bullish divergence and RSI below the chosen long-entry level; a short requires bearish divergence and RSI above its short-entry level. Positions close when RSI reaches the corresponding exit threshold. The script also plots pivot labels and connecting lines, and includes standard overbought and oversold guides. The creator describes BTC on a 30-minute chart as the intended starting configuration and says levels can be adjusted by market and timeframe, but provides no performance results. Confirmed pivots appear with a delay, and the document cautions that the rules do not identify downtrends, so long signals may occur in bearish markets.
Key ideas
- Bullish divergence pairs a lower price pivot low with a higher RSI pivot low.
- Bearish divergence pairs a higher price pivot high with a lower RSI pivot high.
- Entry signals require both a divergence and an RSI threshold condition.
- RSI exit levels are configurable separately for long and short positions.
- Pivot confirmation introduces delay, and the strategy does not filter market trend.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.