RSI(14) Range Reversal

How the rule works

The oscillator must cross back through a threshold; simply being below 30 is insufficient. Falling ADX below 20 is a lagging range filter, so this approach can enter just as volatility changes regime. A fixed R target and an oscillator exit answer different questions: one limits planned reward, the other detects a completed momentum recovery.

Setup

• At close, permit trades only if ADX(14)[1] is below 20 and its value is lower than five bars ago.
• Use bar data available at the close; never decide from the still-forming RSI.

Indicators

• RSI(14), Close
• MT5 ADX Wilder(14)
• ATR(14)

Long entry

• Buy next-bar ask if RSI[2] was below 30 and RSI[1] closes above 30, while Close[1] is above Open[1].

Short entry

• Sell next-bar bid if RSI[2] was above 70 and RSI[1] closes below 70, while Close[1] is below Open[1].

Stop loss

• Long SL = Low[1] − 1.25×ATR14[1]; short SL = High[1] + 1.25×ATR14[1]. Freeze the ATR used for the initial stop.

Exit

• Maintain a fixed target 1.25R from the actual fill. Also exit long when a completed RSI14 >= 55 or short when RSI14 <= 45, at the following executable quote. Exit any remainder after eight complete H1 holding bars. Standing SL/TP orders remain active intrabar.

Risk and position size

• Risk 0.4% equity; size from executable entry to initial stop; no more than two open positions sharing a base or quote currency.

Costs and execution

• Use the broker's historical spread if available; otherwise record spread by session, apply it to bid/ask fills, commissions, slippage and rollover swap.

When the method can fail

• Skip news windows and signals inside the final two hours before Friday New York close. ADX can lag a fresh breakout.

Worked example

• Hypothetical RSI14 moves from 27 to 33 while ADX is 17 and below its value five bars earlier. Signal low 1.0980, ATR 0.0010 and next ask 1.0990 give SL 1.09675, R=22.5 pips and TP 1.1018125 before tick-size rounding. A completed RSI=56 can exit before that target.

Historical test results

No tested pair meets the complete research-screen criterion. Positive cells alone do not qualify the strategy.

18 mechanical runs across 3 pairs on H1. Decisions use completed strategy bars; fills use native ICMarketsEU-Demo M15 Bid candles with explicitly modelled costs. Full window: 1 January 2025–18 September 2026. Shorter available histories: AUDNZD: 2025-01-20. Each row starts with an independent USD10,000 account.

Interpretation: these are mechanical bar-model tests, not verified real-tick or live performance. Price rules were held fixed; subjective market-quality exclusions remain outside the mechanical model. Strategy adaptation requires a new test.

Download all test metrics and assumptions (JSON) · Download simulated trade logs and reproducible research code · Broker commission and swap documentation

Execution conventions

• Bar [0] is forming; [1] is the most recently completed bar. Unless explicitly stated otherwise, indicators use Close with zero plot shift and signals use completed bars. EMA is exponential, SMA is arithmetic and MT5 ATR is its native true-range average. Use at least 300 completed warm-up bars; a longer rule-specific requirement takes priority.
• A close-based signal is executed at the first available quote after the close, never retrospectively at the signal close. Buy at ask, sell at bid; close longs at bid and shorts at ask. A standing stop or target can fill within a bar. A gap through a stop fills at the first executable price, which can be worse than the stop.
• R means the initial entry-to-protective-stop distance, fixed at entry. Convert that distance into account-currency loss using the symbol tick size and loss-side tick value. Lots = cash risk / loss per lot, rounded down to the broker volume step. Round prices to the trade tick and recheck risk plus minimum stop/freeze distances before submitting. Budget commission and slippage separately; skip if minimum size exceeds the risk limit.
• Use one position per symbol and no averaging down. A trailing stop only tightens after a completed bar and becomes active on the next quote. The entry bar is holding bar one; a time exit executes on the quote after the specified holding bar closes. When a hard stop and a close-based exit compete, the stop already active takes precedence. With OHLC-only data, assume stop before target if both can occur in one bar; tick data is needed to resolve the order.
• The article defines the price rule. Any discretionary news exclusion changes the tested variant and must be recorded in advance. Map broker timestamps to the named London/New York time zone using historical daylight-saving offsets; do not assume a fixed UTC offset. Include spread, commission, slippage, overnight financing and triple-swap days in a profitability test.

Adapt and test your version

• Treat these inputs as a reproducible starting specification. Choose a currency pair, session and holding period that match the time you can monitor the market, then record any changes to indicator periods, thresholds, stop distance or exits as a new version.
• Change one hypothesis at a time. Reserve a later period and additional pairs for evaluation before looking at their results. Include your account’s actual trading and financing costs, compare small parameter changes, and forward-test on demo. A selected profitable window does not validate the strategy or its modified version.

Reproduce the chart in MT5

• Open EURUSD on H1. Add the indicators listed above through Insert → Indicators; use Close and zero shift unless a different setting is specified. The Data Window displays exact values for the selected completed candle.
• Compare the signal candle with the required earlier bars before moving forward. Use the crosshair to read prices and times. For custom channels, session levels or Supertrend, reproduce the formula in this guide and check the calculation before relying on an external indicator.
• Draw entry, initial SL and target only after a candle has satisfied every condition. Label planned levels as plans; they do not demonstrate a historical fill. The featured chart is genuine historical MT5 context and is not a trade-performance report.

Sources

• Relative Strength Index — RSI definition.
• MT5 Help: Average Directional Movement Index Wilder — Wilder indicator definition; not strategy performance.