Fade extreme moves expecting price to return to average. Highly effective in low-volatility, ranging market conditions.
Intermediate1H / 4H
Difficulty
How it works
When RSI hits 80+ or Bollinger Band outer level, price is statistically likely to revert to the mean (20-day SMA). Enter counter-trend with tight stops.
Indicators used
RSI (14) overbought/oversold
Bollinger Bands (2 SD)
Stochastic divergence
VWAP deviation
Warning
Never use in trending markets — this strategy will destroy you. Always confirm ranging conditions first. RSI can stay above 80 for weeks in strong trends.