Overview
The Bottoming Reversal Strategy is a technical analysis approach that identifies potential reversal points by looking for oversold conditions combined with bullish momentum indicators. This multi-indicator approach helps filter out false signals and increases the probability of successful trades.
How It Works
The strategy looks for the following conditions:
- RSI below 35 (oversold condition)
- Bullish MACD crossover (momentum confirmation)
- Tight Bollinger Bands (volatility contraction)
Entry and Exit Rules
• RSI below 35 (oversold)
• MACD line crosses above signal line
• Bollinger Bands width below 0.2
• RSI crosses above 70 (overbought)
• MACD line crosses below signal line
• Price reaches predefined target (1.5-3x risk)
- Counter-trend trading
- Medium-term holds
- Volatile markets
- Major cryptocurrencies
Price Action Analysis: March 13, 2020 (COVID Crash)
Bitcoin (BTC) - Price Action After RSI Convergence (March 13, 2020)
This chart shows the price action of Bitcoin after the bottoming reversal event during the COVID crash. The price increased by 89.42% over 90 days, demonstrating the effectiveness of the Bottoming Reversal Strategy in identifying strong reversal points.
The 90-day timeframe shows the highest success rate at 72.63%, with an impressive average return of 52.18%.
15-Day Performance
15 Days Performance Metrics
Analysis Scripts
The Bottoming Reversal Strategy analysis was performed using custom TypeScript scripts that fetch historical data, calculate RSI, MACD, and Bollinger Bands values, identify reversal events, and analyze price action after these events.
Key Scripts
- analyzeBottomingReversal.tsIdentifies bottoming reversal events
- analyzePriceActionAfterReversal.tsAnalyzes price action after reversals
- validate-strategies.tsValidates strategy performance
Data Sources
- Historical price data from CryptoCompare API
- Time range: 2015-2025 (including projected data)
- Timeframes: 15m, 1h, 4h, 12h, 1d
- Primary asset: Bitcoin (BTC)
Methodology
The analysis follows these steps:
- Fetch historical price data for BTC across multiple timeframes
- Calculate RSI, MACD, and Bollinger Bands values
- Identify events where RSI is below 35, MACD is bullish, and Bollinger Bands are tight
- Track price action after each reversal event for 15, 30, 60, and 90 days
- Calculate success rates, average returns, and other performance metrics
Results Files
The analysis results are stored in the following files:
- BTC_bottoming_reversal.json950 reversal events identified
- BTC_price_action_analysis.jsonDetailed price action analysis
- BTC_price_action_analysis.csvCSV format for easy analysis