RSI Mean Reversion

Oversold/Overbought Reversal Strategy
This strategy is built upon the foundational principle of mean reversion, using the Relative Strength Index (RSI) to detect extreme market conditions and anticipate short-term reversals. The approach focuses on capturing bounces from overbought or oversold zones by entering positions against the prevailing short-term momentum.

Strategy Logic:
RSI Calculation is based on a default 14-period setting, a widely accepted standard in momentum analysis.

Entry Signals:
Long Entry: Triggered when RSI crosses below the overbought level, suggesting potential downward exhaustion and an upcoming mean reversion.

Short Entry: Triggered when RSI crosses above the oversold level, indicating upward exhaustion and a likelihood of a corrective move.

 Core Parameters:

RSI Length (default: 14)  Overbought Threshold (default: 70)  Oversold Threshold (default: 30) These parameters can be adjusted to match asset volatility and timeframe-specific characteristics.  

Suggested Use Cases:

This strategy is best suited for ranging or sideways markets where price tends to revert to a mean. Can be tested on 1h, 4h, or daily timeframes, depending on the asset’s historical volatility profile.  

Final Notes:

This is a basic yet powerful approach to mean reversion trading. Keep in mind that RSI signals alone may lead to false entries in strongly trending markets. Use with proper risk management or combine with trend filters for improved accuracy.  Note: Different assets may require specific parameter adjustments. Users are responsible for optimizing the strategy settings for the asset they trade. Please ensure you fine-tune the parameters according to your trading pair.