The Triple Rocket

Trading Strategy Overview: Trend-Following & Momentum Reversal

Core Philosophy

This trading strategy is designed to capture high-probability continuation and reversal entries by combining a long-term trend filter with short-term momentum signals. It operates under the principle of trading in the direction of the macro trend while utilizing oscillator extremes for precise entry timing.

Key Indicators

1. 200-Period Simple Moving Average (200 SMA): The primary trend filter used to determine the overall market bias.

   • Bullish Regime: Price is trading above the 200 SMA, signaling an upward macro trend.

   • Bearish Regime: Price is trading below the 200 SMA, signaling a downward macro trend.

2. Relative Strength Index (RSI - typically set to 14 periods): The momentum oscillator used to identify overbought and oversold conditions, as well as potential pullback entries.

Strategy Rules & Execution

1. Long (Buy) Setup

• Trend Filter: The price must be trading above the 200 SMA, confirming a primary bull market.

• Momentum Trigger: Wait for a temporary market pullback where the RSI dips below the 30 level (oversold) and then crosses back above 30, or exhibits a bullish divergence/reversal structure.

• Execution: Open a Buy position upon the confirmation of the RSI breaking back above the threshold, ensuring alignment with the upward slope of the 200 SMA.

2. Short (Sell) Setup

• Trend Filter: The price must be trading below the 200 SMA, confirming a primary bear market.

• Momentum Trigger: Wait for a corrective rally where the RSI pushes above the 70 level (overbought) and subsequently crosses back below 70.

• Execution: Open a Sell position once the RSI confirms momentum fading by crossing back below the 70 line, in alignment with the downward trend.

Risk Management

• Stop Loss: Typically placed just beyond the recent swing high (for short trades) or swing low (for long trades) formed around the entry zone.

• Take Profit: Targeted at key structural support/resistance levels or maintained using a favorable risk-to-reward ratio (e.g., 1:2 or 1:3).