Weekly Two RSI Strategy for Major Indexes

Summary

This weekly strategy adapts a two-period RSI approach attributed to Larry Connors. It combines a 50-period simple moving average with extreme RSI readings to enter in the direction of the broader trend: it starts a long position when price is above the average and RSI is at or below 10, and a short position when price is below the average and RSI is at or above 90. If the signal becomes more extreme after at least one bar, it adds a second unit. Longs exit above RSI 70; shorts exit below RSI 30. The stated unit sizes are one for each entry.

The author says the same parameters were optimized for weekly charts and tested on several major indexes, but supplies no performance figures, test period, costs, or drawdown evidence. The rules are presented for automated trading or as a manual entry aid. The document does not explain position sizing beyond the fixed units, how simultaneous long and short states are handled, or how results may vary across markets and execution conditions.

Key ideas

• The strategy uses a 50-period moving average to determine whether to consider long or short trades.
• A two-period RSI reading of 10 or lower triggers an initial long entry above the average.
• A reading of 90 or higher triggers an initial short entry below the average.
• The strategy can add one unit after at least one weekly bar if RSI reaches a more extreme threshold.
• Long and short positions exit when RSI crosses the stated 70 and 30 thresholds, respectively.

Tags

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