Overview
The RSI Compression Strategy is a technical analysis approach that identifies potential reversal points by looking for oversold conditions across multiple timeframes simultaneously. This multi-timeframe confirmation helps filter out false signals and increases the probability of successful trades.
How It Works
The strategy looks for the following conditions:
- RSI below 30 on the 1-hour chart (primary oversold condition)
- RSI below 30 on the 4-hour chart (intermediate confirmation)
- RSI below 40 on the 12-hour chart (higher timeframe alignment)
- RSI below 45 on the daily chart (trend confirmation)
Entry and Exit Rules
• All RSI conditions met across timeframes
• Price forms a higher low on lower timeframes
• Volume increasing on potential reversal
• RSI crosses above 70 on 1-hour chart
• Price reaches predefined target (1.5-3x risk)
• Stop loss at recent swing low minus buffer
- Volatile crypto markets
- Counter-trend trading
- Swing trading strategies
- High market cap assets
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 RSI convergence event during the COVID crash. The price increased by 89.42% over 90 days, demonstrating the effectiveness of the RSI Compression Strategy in identifying strong reversal points.
The 90-day timeframe shows the highest success rate at 74.81%, with an impressive average return of 63.33%.
15-Day Performance
15 Days Performance Metrics
Analysis Scripts
The RSI Compression Strategy analysis was performed using custom TypeScript scripts that fetch historical data, calculate RSI values across multiple timeframes, identify convergence events, and analyze price action after these events.
Key Scripts
- analyzeRSIConvergence.tsIdentifies RSI convergence events
- analyzePriceActionAfterRSI.tsAnalyzes price action after convergence
- analyzeRSIBelow30.tsIdentifies RSI below 30 events
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 values for each timeframe using a 14-period lookback
- Identify events where RSI values converge below 30 across multiple timeframes
- Track price action after each convergence 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_rsi_convergence.json1,215 convergence events identified
- BTC_price_action_analysis.jsonDetailed price action analysis
- BTC_price_action_analysis.csvCSV format for easy analysis