Mogwai Method with RSI and EMA - BTCUSD 15m

This is a custom TradingView indicator designed for trading Bitcoin (BTCUSD) on a 15-minute timeframe. It’s based on the Mogwai Method—a mean-reversion strategy—enhanced with the Relative Strength Index (RSI) for momentum confirmation. The indicator generates buy and sell signals, visualized as green and red triangle arrows on the chart, to help identify potential entry and exit points in the volatile cryptocurrency market.
Components
Bollinger Bands (BB):
Purpose: Identifies overextended price movements, signaling potential reversions to the mean.

Parameters:
Length: 20 periods (standard for mean-reversion).

Multiplier: 2.2 (slightly wider than the default 2.0 to suit BTCUSD’s volatility).

Role:
Buy signal when price drops below the lower band (oversold).

Sell signal when price rises above the upper band (overbought).

Relative Strength Index (RSI):
Purpose: Confirms momentum to filter out false signals from Bollinger Bands.

Parameters:
Length: 14 periods (classic setting, effective for crypto).

Overbought Level: 70 (price may be overextended upward).

Oversold Level: 30 (price may be overextended downward).

Role:
Buy signal requires RSI < 30 (oversold).

Sell signal requires RSI > 70 (overbought).

Exponential Moving Averages (EMAs) (Plotted but not currently in signal logic):
Purpose: Provides trend context (included in the script for visualization, optional for signal filtering).

Parameters:
Fast EMA: 9 periods (short-term trend).

Slow EMA: 50 periods (longer-term trend).

Role: Can be re-added to filter signals (e.g., buy only when Fast EMA > Slow EMA).

Signals (Triangles):
Buy Signal: Green upward triangle below the bar when price is below the lower Bollinger Band and RSI is below 30.

Sell Signal: Red downward triangle above the bar when price is above the upper Bollinger Band and RSI is above 70.

How It Works
The indicator combines Bollinger Bands and RSI to spot mean-reversion opportunities:
Buy Condition: Price breaks below the lower Bollinger Band (indicating oversold conditions), and RSI confirms this with a reading below 30.

Sell Condition: Price breaks above the upper Bollinger Band (indicating overbought conditions), and RSI confirms this with a reading above 70.

The strategy assumes that extreme price movements in BTCUSD will often revert to the mean, especially in choppy or ranging markets.

Visual Elements
Green Upward Triangles: Appear below the candlestick to indicate a buy signal.

Red Downward Triangles: Appear above the candlestick to indicate a sell signal.

Bollinger Bands: Gray lines (upper, middle, lower) plotted for reference.

EMAs: Blue (Fast) and Orange (Slow) lines for trend visualization.

How to Use the Indicator
Setup
Open TradingView:
Log into TradingView and select a BTCUSD chart from a supported exchange (e.g., Binance, Coinbase, Bitfinex).

Set Timeframe:
Switch the chart to a 15-minute timeframe (15m).

Add the Indicator:
Open the Pine Editor (bottom panel in TradingView).

Copy and paste the script provided.

Click “Add to Chart” to apply it.

Verify Display:
You should see Bollinger Bands (gray), Fast EMA (blue), Slow EMA (orange), and buy/sell triangles when conditions are met.

Trading Guidelines
Buy Signal (Green Triangle Below Bar):
What It Means: Price is oversold, potentially ready to bounce back toward the Bollinger Band middle line.

Action:
Enter a long position (buy BTCUSD).

Set a take-profit near the middle Bollinger Band (bb_middle) or a resistance level.

Place a stop-loss 1-2% below the entry (or based on ATR, e.g., ta.atr(14) * 2).

Best Context: Works well in ranging markets; avoid during strong downtrends.

Sell Signal (Red Triangle Above Bar):
What It Means: Price is overbought, potentially ready to drop back toward the middle line.

Action:
Enter a short position (sell BTCUSD) or exit a long position.

Set a take-profit near the middle Bollinger Band or a support level.

Place a stop-loss 1-2% above the entry.

Best Context: Effective in ranging markets; avoid during strong uptrends.

Trend Filter (Optional):
To reduce false signals in trending markets, you can modify the script:
Add and ema_fast > ema_slow to the buy condition (only buy in uptrends).

Add and ema_fast < ema_slow to the sell condition (only sell in downtrends).

Check the Fast EMA (blue) vs. Slow EMA (orange) alignment visually.

Tips for BTCUSD on 15-Minute Charts
Volatility: BTCUSD can be erratic. If signals are too frequent, increase bb_mult (e.g., to 2.5) or adjust RSI levels (e.g., 75/25).

Confirmation: Use volume spikes or candlestick patterns (e.g., doji, engulfing) to confirm signals.

Time of Day: Mean-reversion works best during low-volume periods (e.g., Asian session in crypto).

Backtesting: Use TradingView’s Strategy Tester (convert to a strategy by adding entry/exit logic) to evaluate performance with historical BTCUSD data up to March 13, 2025.

Risk Management
Position Size: Risk no more than 1-2% of your account per trade.

Stop Losses: Always use stops to protect against BTCUSD’s sudden moves.

Avoid Overtrading: Wait for clear signals; don’t force trades in choppy or unclear conditions.

Example Scenario
Chart: BTCUSD, 15-minute timeframe.

Buy Signal: Price drops to $58,000, below the lower Bollinger Band, RSI at 28. A green triangle appears.
Action: Buy at $58,000, target $59,000 (middle BB), stop at $57,500.

Sell Signal: Price rises to $60,500, above the upper Bollinger Band, RSI at 72. A red triangle appears.
Action: Sell at $60,500, target $59,500 (middle BB), stop at $61,000.

This indicator is tailored for mean-reversion trading on BTCUSD. Let me know if you’d like to tweak it further (e.g., add filters, alerts, or alternative indicators)!