The SuperTrend & RSI Strategy is a trend-momentum trading approach that combines the trend-following accuracy of the SuperTrend indicator with the momentum filtering of the Relative Strength Index (RSI). This combination helps traders identify high-quality entries during trend continuation and spot potential reversals based on overbought/oversold conditions.

This strategy is widely used in forex, stocks, crypto, and commodities, particularly by intraday and swing traders seeking precision entries and clear directional bias.

What Are SuperTrend and RSI?

SuperTrend is a dynamic trend indicator based on ATR (Average True Range) and price. It plots a line that shifts above or below price depending on the trend:

• Price above SuperTrend: Uptrend
• Price below SuperTrend: Downtrend
• Provides visual signals for trend change and trailing stops

RSI (Relative Strength Index) measures the strength and momentum of recent price movements:

• Ranges from 0 to 100
• Above 70: Overbought (potential reversal down)
• Below 30: Oversold (potential reversal up)
• Often used to detect divergence and short-term exhaustion

Why Use SuperTrend & RSI Together?

• SuperTrend defines the overall trend direction and acts as a trailing stop
• RSI fine-tunes entry timing by filtering for pullbacks, exhaustion, or momentum shifts
• Together, they create a robust system for both trend-following and countertrend setups

How to Trade the SuperTrend & RSI Strategy

1. Apply the Indicators

• SuperTrend: Use default setting (Period = 10, Multiplier = 3), or adjust based on volatility
• RSI: 14-period standard setting

2. Identify the Trend With SuperTrend

• If price is above SuperTrend line, favour long trades
• If price is below SuperTrend, favour short trades

3. Use RSI for Entry Signals

Trend Continuation (With Trend):

• SuperTrend indicates uptrend
• Wait for RSI to dip to 40–50 (mild pullback)
• Enter long when RSI turns upward again
• For short trades: RSI rises to 50–60 during a downtrend, then turns lower

Trend Exhaustion (Reversal Opportunity):

• SuperTrend starts to flatten or price pierces it
• RSI is overbought (>70) or oversold (<30)
• Look for divergence or candlestick confirmation
• Enter reversal trade cautiously with confirmation of trend shift

4. Entry, Stop, and Exit Rules

Entry (Trend Setup):

• SuperTrend trend aligns with trade direction
• RSI dips into neutral zone (40–50 in uptrend), then turns up
• Enter on candle close above SuperTrend line

Entry (Reversal Setup):

• RSI extreme level (70/30) + divergence
• Price closes through SuperTrend in opposite direction
• Enter on confirmation candle

Stop-loss:

• Just below SuperTrend line for longs, above for shorts
• Or use 1 × ATR as volatility-adjusted stop

Take-profit:

• Prior swing high/low
• Risk-to-reward ratio (e.g. 2:1)
• Trailing stop using SuperTrend

Example Trade Setup

Market: ETH/USD 1H

• Price is above SuperTrend → uptrend
• RSI dips to 42 and begins rising again
• Bullish engulfing candle forms above SuperTrend
  Trade: Enter long
  Stop-loss: Below SuperTrend line
  Target: Previous high or 2× ATR

Alternatively:

• Price crosses below SuperTrend with RSI divergence at 72
• RSI turns down and price closes below support
  Trade: Short reversal

Best Markets and Timeframes

Markets:
Forex: GBP/USD, AUD/JPY, USD/CHF
Stocks: Trending large caps or ETFs
Crypto: BTC/USD, ETH/USD
Commodities: Gold, oil

Timeframes:
Intraday: 15M–1H
Swing: 4H–Daily
Trend-following position: Daily–Weekly

Best Tools and Platforms

• TradingView (built-in SuperTrend and RSI)
• MetaTrader 4/5 (SuperTrend available via custom indicator)
• Thinkorswim
• NinjaTrader
• Alerts: Set RSI crossover and SuperTrend change notifications

Common Mistakes to Avoid

• Trading against SuperTrend direction without strong reversal signal
• Entering on RSI alone without price action or confirmation
• Using RSI extreme levels without trend context
• Failing to adjust SuperTrend settings for different volatility environments
• Ignoring support/resistance and overall market structure

Conclusion

The SuperTrend & RSI Strategy offers a balanced system for identifying clean trends and optimising entries with momentum insights. It works well in both trending and reversal environments, giving traders flexibility and structure. With proper filters and discipline, it can form a reliable foundation for discretionary or algorithmic trading systems.

To master this and other hybrid momentum strategies, enrol in our comprehensive Trading Courses at Traders MBA and elevate your execution with clarity and consistency.