Strategy · Mean Reversion
MEAN REVERSION ON OVERSOLD MAJORS
BullishDefined riskIntermediate
Overview
Buy BTC or ETH after a sharp 15-25% drop into well-defined support, with RSI <30 on the daily. Targets a partial retracement back to the mean.
Setup
- 1.Identify support tested historically (200-day MA, prior consolidation zone, or major liquidity cluster).
- 2.Wait for capitulation: high-volume sell-off followed by a daily close above the prior session.
- 3.Enter on the confirmation candle with stop 3-5% below the swing low.
- 4.Target the 20-day EMA as first profit-take and the 50-day as the second.
- 5.Use no more than 2x leverage; reversion trades can fail spectacularly in a downtrend.
- 6.Exit fully if price re-tests and breaks the swing low.
Max profit
Typical mean-reversion bounces are 8-20%; partial profit-taking captures most of it.
Max loss
Stop distance × position size (typically 1-2% of account).
Breakeven
Entry price plus fees.
When to use
In ranging or moderately uptrending markets. Best when the broader market is also oversold.
When to avoid
Inside confirmed downtrends. Around scheduled high-impact events that could break the support level.