Parallel channel + RSI-Divergence strategy
Can be used on every timeframe but I prefer 1Minute to 1Hour candles, 1Day-timeframe triggers are not very often. Example pictures are from the 1hour chart.
Trading divergences allows to set tight stops. But trading divergences is also trading countertrend most of the time. enhances the win/loss-trades ratio and still enters fast enough to don´t get in to late.
Theoretic part and Rules
What´s a parallel channel? The is basically a linear function f(x)= ax +b and the same function with another value for b. In other words, an angle of price/time copied to another extremum. So, the break of channel shows us changing in price/time power.
The Rules (example reversal)
Trend is ,
was < 30 (Extra Rule for RSI: the first extrema that is combined with the second one has to be in the extreme zones of the (below 30 for searching , over 70 for searching signals))
divergence = true
Channel anchor 1 is first lowest low
Channel anchor 2 is second lowest low
Channel anchor 3 is the high of the price at the time that would lead to the highest upperchannelline (the linear function with the highest value for b), alternative: highest high
Set a buystop to the upper channel if you like to trade aggressive.
Or use extra Entry Execution rules to enhance the strategy more…
if close > upperchannel then Signal == true
or if close > some MA then Signal == true
or if …
Buy false trigger
SELL filtered out
BUY filtered out