MACD + RSI Strategy: A Comprehensive Guide with 5 Backtest Examples

Introduction

In technical analysis, combining the Moving Average Convergence Divergence (MACD) and Relative Strength Index (RSI) creates a robust trading strategy. This guide explores how to integrate these indicators effectively, supported by actionable steps, backtest results, and FAQs.

Understanding the MACD Indicator

The MACD measures momentum using:

• MACD Line: Difference between 12-day and 26-day EMAs.
• Signal Line: 9-day EMA of the MACD line.
• Histogram: Visualizes gaps between the MACD and signal line.

Key MACD Signals:

1. Bullish Crossover: MACD line crosses above the signal line.
2. Bearish Crossover: MACD line crosses below the signal line.
3. Divergence: Price and MACD move inversely, signaling potential reversals.

Understanding the RSI Indicator

The RSI (0–100 scale) identifies overbought (>70) and oversold (<30) conditions.

Key RSI Signals:

• Overbought/Oversold: Warns of potential reversals.
• Bullish/Bearish Divergence: Price and RSI trends contradict, indicating momentum shifts.

Why Combine MACD and RSI?

• MACD: Tracks trend momentum.
• RSI: Gauges overextension.
  Together, they filter false signals and confirm high-probability trades.

👉 Learn more about optimizing MACD and RSI

Step-by-Step MACD + RSI Strategy

Step 1: Analyze Market Context

• Identify trends (uptrend/downtrend/range-bound).
• Prefer higher timeframes (1-hour+ charts) for cleaner signals.

Step 2: Check RSI Levels

• Long Trades: Wait for RSI <30 (oversold).
• Short Trades: Wait for RSI >70 (overbought).

Step 3: Confirm with MACD

• Bullish Entry: RSI oversold + MACD crossover above signal line.
• Bearish Entry: RSI overbought + MACD crossover below signal line.

Step 4: Watch for Divergences

• Enhances trade validity (e.g., bullish RSI divergence + MACD crossover).

Step 5: Manage Risk

• Stop Loss: Below swing low (long) / above swing high (short).
• Take Profit: Scale out or use trailing stops.

Step 6: Backtest & Refine

• Test on historical data and demo accounts before live trading.

Profitable Backtest Examples

1. Plug Power, Inc. (PLUG) – 5-min chart: 3C MACD & RSI Scalper.
2. Accenture plc (ACN) – 15-min chart: 3C MACD & RSI Scalper.

Common Pitfalls to Avoid

• Ignoring Trends: Trade with the trend for higher success rates.
• No Stop Losses: Always protect capital.
• Overoptimization: Stick to default settings (MACD 12-26-9, RSI 14) initially.

FAQs

1. Can MACD + RSI work for scalping?

Yes, but use shorter timeframes (5–15 mins) and confirm signals with volume analysis.

2. What’s the best RSI setting for swing trading?

RSI 14 is standard; adjust to RSI 9 for more sensitivity or RSI 25 for reduced noise.

3. How do I avoid false signals?

Require confluence: RSI extremes + MACD crossover + trend alignment.

👉 Explore advanced MACD/RSI techniques

4. Which assets suit this strategy?

Liquid stocks, forex pairs, and ETFs with clear trends.

5. How do divergences improve accuracy?

They signal weakening momentum before price reversals.

Final Thoughts

The MACD + RSI strategy synergizes momentum and overextension signals, improving trade precision. Backtest rigorously, manage risk, and adapt to market conditions for consistent results.