DAILY Supertrend + EMA Crossover with RSI Filter

The DAILY Supertrend + EMA Crossover with RSI Filter indicator combines trend-following mechanisms with momentum filtering to identify high-probability entries in the direction of the prevailing market trend.

Usage

This tool is designed to identify trade setups by aligning the direction of the Supertrend with Exponential Moving Average (EMA) crossovers. A long signal is generated when a fast EMA crosses above a slow EMA while the price is above the Supertrend line, provided the RSI is below the overbought threshold. Conversely, a short signal occurs when a fast EMA crosses below a slow EMA while the price is below the Supertrend line and the RSI is above the oversold threshold.

Traders can use the visual signals (triangles) on the chart to identify these confluence points. The script also includes a built-in backtesting framework with automated risk management, plotting dynamic exit levels based on the Average True Range (ATR).

Details

The strategy logic relies on three distinct layers of confirmation:

• Trend Confirmation: The Supertrend acts as a primary filter, ensuring trades are only taken in the direction of the established trend.
• Momentum Timing: The EMA crossover (Fast EMA vs. Slow EMA) serves as the trigger for the entry, capturing shifts in short-term momentum.
• Overextension Filter: The RSI ensures that entries are not taken when the market is potentially overextended. This prevents "buying the top" or "selling the bottom" by requiring the RSI to be within a reasonable range before an entry is valid.

Settings

Core Parameters

• Fast EMA Period: Sets the lookback period for the faster moving average.
• Slow EMA Period: Sets the lookback period for the slower moving average.
• ATR Length: Determines the period used to calculate the Average True Range for both Supertrend and risk levels.

Risk Management

• Stop Loss ATR Multiplier: Defines the distance of the stop loss from the entry price based on volatility.
• Take Profit ATR Multiplier: Defines the distance of the profit target from the entry price based on volatility.

RSI Filter

• RSI Length: The period used for the Relative Strength Index calculation.
• RSI Overbought Level: The threshold below which a long entry is permitted.
• RSI Oversold Level: The threshold above which a short entry is permitted.
• Show RSI in separate panel: Toggles the visibility of the RSI line on the chart.

Time Filter

• Start/End Filter: Allows users to restrict the execution of the strategy to a specific date and time range.

FAQ

How do I interpret the signals?

A green triangle below the bar indicates a long entry condition where trend, EMA, and RSI align. A red triangle above the bar indicates a short entry condition.

Can I change the risk-to-reward ratio?

Yes, by adjusting the Stop Loss and Take Profit ATR Multipliers in the settings, you can dynamically scale your risk management based on market volatility.

How do I access this script?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.