Trend-following RSI Strategy According to classical technical analysis, an RSI above 70 should signal overbought conditions and, thus, a sell-signal. Cryptocurrencies represent a whole new asset class, and they reshape the classical concepts of technical analysis. FOMO-buying can be very powerful, and coins can remain in overbought conditions enough to provide excellent opportunities for scalping trades on the upside.
Building a trend-following trading strategy based on the RSI, which is generally considered a contrarian indicator, may sound counter-intuitive. Over 200 backtests prove that this is a very interesting long-term setup.
The setup is optimized on a 4-hours time frame and trading cryptocurrencies versus USD or stable coins.
The strategy tries to catch coins on sustained uptrends to take advantage of further upside.
The strategy's buy-signal triggers when a coin has an RSI above 70 on a 4-hours time frame.
The strategy sells the coin if a profit of 6% is achieved. Alternatively, it closes the position if the RSI drops below 55, indicating a possible weakening of the trend.
The strategy assumes each order to trade 30% of the available capital. A trading fee of 0.1% is taken into account. The fee is aligned to the base fee applied on Binance, which is the largest cryptocurrency exchange.
Followthetrend
FRAMA - Supertrend strategyFRAMA Strategy
I found this strategy on internet, in a well-known forex forum.
I have translated the two indicators mentioned in that strategy (originally in mq4) in pine script.
Thanks to Fractured and Shizaru for the FRAMA snippets, to mejialucas for Supertrend snippet, to JayRogers for trade management snippet and to Trost for backtesting snippet.
I also added some code to have FRAME with a deiiferent timeframe
Indicators set-up:
FRAMA period 24 (it was originally 25 but it's better to use an even number)
FRAMA timefarme lower then chart timeframe (e.g. daily chart and weekly FRAMA)
Supertrend indicator as it is.
Of course, it is better to adapt above setting to traded instrument.
Long/Buy rules:
1 - Enter at crossover between FRAMA and its signal
2 - Option to filter entries based on supertrend signal
3 - Exit when Supertrend change direction;
4 - Exit long when short signal occurs;
Short/Sell rules:
1 - Enter at crossunder between FRAMA and its signal
2 - Option to filter entries based on supertrend signal
3 - Exit when Supertrend change direction;
4 - Exit short when long signal occurs;
VERY IMPORTANT NOTE: this is a trend following strategy, so the target is to stay in the trade as much as possible (drawdown my be high). If your trading style is more focused on scalping and/or pullbaks, this strategy is not for you.
Credits to who developed this startegy (google it).
Thanks to all pinescripters mentined in the code for their snippets.
I have also a study with alerts.
Please use comment section for any feedback or contact me if you need support.
