Shell RSI Strategy

In strong trends, RSI can stay overbought or oversold for extended periods. RSI 70 in a strong uptrend might just pause, not reverse. Always consider trend context before expecting reversal.

RSI 14 is standard and recommended for beginners. RSI 7 is more sensitive with more signals but more false ones. Start with 14, adjust based on experience and timeframe.

RSI alone can work but adding one confirmation (trend filter like 50 EMA, or volume) significantly improves results. Don't over-complicate, but don't rely solely on RSI.

Daily chart RSI(14) works well for swing trading Shell. For intraday, use hourly RSI. Match timeframe to your holding period.

RSI below 30 shows oversold but price can keep falling. Crossing back above 30 confirms buyers are stepping in and reversal is starting - better entry than catching a falling knife.

Divergence is a warning, not immediate entry. Wait for confirmation: price breaking pattern, RSI crossing key level (30/50), or reversal candle. Never trade divergence without confirmation.

Regular divergence signals reversal (price new high, RSI lower high = bearish). Hidden divergence signals continuation (price higher low, RSI lower low in uptrend = bullish continuation).

Uptrend: Expect RSI 40-80, buy dips to 50. Downtrend: Expect RSI 20-60, sell rallies to 50. Range: Classic 30/70 works. Identify condition first, then adapt strategy.

Yes, use RSI(7) or RSI(14) on 15-min or hourly charts. Same concepts apply but faster. Combine with intraday indicators like VWAP for better results.

Quality over quantity. 2-4 good setups per week is sufficient. Don't force trades when RSI is in neutral zone (40-60) with no clear signal.

Use 70/30 in-sample/out-of-sample split. Accept 10-20% performance degradation as normal. Test nearby parameters - results should be similar. Standard 14/30/70 is often near-optimal.

Mean reversion: 55-60% win rate. Trend following (50 cross): 45-50%. Divergence: 50-55%. Profitability comes from positive expectancy, not just win rate.

Allocate 20-30% to RSI strategies. Mix mean reversion, trend, and divergence approaches. Track each separately. Monitor correlation with other strategies to avoid overexposure.

Use options when: want defined risk, seeking leverage, trading divergence (straddles), or capital-constrained. Use stock when: longer hold expected, simpler management preferred, or options illiquid.

5% drawdown: Review for rule violations. 8% drawdown: Reduce size 30%. 10% drawdown: Pause, full review. Resume with paper trading, then 50% size. Scale back up gradually.