ATR Exhaustion and Volume Spikes at Pivot Reversal Levels

Summary

This reversal strategy combines recent pivot highs and lows, average true range, volume, and candle direction. It treats price as exhausted when its distance from a stored pivot exceeds an ATR-based threshold, then requires price to be near a pivot and current volume to exceed its moving average by a multiplier. A bullish candle or close above the previous high can trigger a long near support; a bearish candle or close below the previous low can trigger a short near resistance.

The script places a stop around the pivot or current candle extreme and sizes the position from a chosen fraction of strategy equity and stop distance, with a fixed risk-to-reward target. The description recommends a two-hour chart for stability and says shorter intervals may need ATR retuning. No backtest results or market-specific evidence are supplied. Pivot confirmation, volume quality, and the distance rules depend on the instrument and timeframe, so the stated risk fraction and target ratio do not establish actual risk or profitability.

Key ideas

• The strategy identifies support and resistance from the most recently confirmed pivot low and high.
• It requires an ATR-sized move, proximity to a pivot, a volume surge, and a directional candle trigger before entering.
• Stops are placed using the nearby pivot or current bar extreme, and targets use a configurable risk-to-reward multiple.
• Position quantity is calculated from a percentage of equity divided by the price distance to the stop.
• The author recommends a two-hour timeframe and suggests retuning ATR settings for shorter intervals.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.