Concept
RSI-2
RSI-2 is a Momentum & Oscillators concept. The Library holds 3 implementations, each one a working definition you can pull into Quant.
short-lookback mean reversion
Top RSI-2 indicators
3 total
What is RSI-2?
RSI-2 is the standard RSI calculation run with a two-period lookback. At that length the oscillator stops behaving like a trend gauge and becomes a short-term stretch meter: it pushes toward 100 after two strong up closes and toward 0 after two weak ones, so readings reach the extremes far more often than the default 14-period setting does. Larry Connors popularized the setting as a mean-reversion trigger, arguing that in a persistent uptrend a deeply oversold RSI-2 more often marks a routine pullback than the start of a decline.
The widely published Connors rules show the intended shape of the trade: take longs only when price is above its 200-day SMA, enter when RSI-2 closes below a low threshold such as 10 (or 5 for stricter selection), and exit when price closes back above a short average such as the 5-day, or when the oscillator recovers. Exact numbers vary by source; the shared logic is buying short-term weakness inside a long-term uptrend instead of chasing strength. Nothing about the setting guarantees the pullback ends; the trend filter exists because sometimes it does not.
How traders use it
- As a dip-buying trigger inside a trend filter: with price above a slow moving average, an RSI-2 close below 10 flags the stretched pullback, and the exit is typically a close back above a short average rather than a fixed profit target.
- Mirrored for shorts in downtrends: below the long-term average, RSI-2 readings above 90 or 95 flag two-bar rallies that mean-reversion traders fade.
- In stricter variants that demand a deeper stretch: requiring RSI-2 below 5, two consecutive closes below the threshold, or a cumulative sum of readings before entry.
RSI-2 vs related RSI concepts
RSI: The parent oscillator at its default 14-period length is read for trend strength, ranges, and divergence. RSI-2 is the same formula compressed until it measures only a two-bar stretch, which is why its meaningful bands move from 70/30 out to 90/10 or 95/5.
Connors RSI: Both carry the Connors name, which invites mix-ups. RSI-2 is plain RSI with a 2-period lookback. Connors RSI is a composite that averages three components: a short RSI of price, an RSI of the up/down streak length, and a percent rank of recent returns.
Related concepts · RSI family
Concept family
Momentum & Oscillators
91 concepts mapped · 72 in the Library
RSI-2 FAQ
What settings does the RSI-2 strategy use?
The commonly published version uses a 2-period RSI with entries below 10 (or 5 for stricter selection), a 200-day simple moving average as the trend filter, and an exit on a close above the 5-day average. Variants abound, and none of the thresholds are magic numbers; they trade signal frequency against selectivity.
Is RSI-2 a trend-following or mean-reversion tool?
Mean reversion. A two-period RSI hits its extremes constantly, so the readings are used to fade short-term moves, not to confirm them. That is why the classic rules pair it with a long-term trend filter: the failure mode is a pullback that keeps extending into a real downtrend.
Build RSI-2 your way.
Quant writes, tests, and refines it with you — then it runs on LuxAlgo charting or ports to TradingView.