Candlestick Reversal Entries Filtered by a Long-Term EMA

Summary

This strategy combines a long-term exponential moving average filter with two- and three-candle patterns to seek possible reversals. It treats price above the EMA as an uptrend and looks for a bullish setup involving a hammer-like candle, followed by a green current candle and additional price comparisons. The inverse pattern is used for shorts below the EMA.

Entries use a fixed quantity. Stops are placed beyond the prior candle’s low or high by one seven-period ATR, while profit targets extend from the entry by the prior candle’s range plus ATR. The document provides the rules in Pine Script but gives no performance results or market-specific evaluation. The page description recommends tuning parameters for the instrument; the code’s EMA length also differs from the release note’s reference to EMA 200, so the implemented filter is the more reliable description of this version.

Key ideas

• The strategy allows long setups only when price is above a long-term EMA and short setups only when it is below.
• Bullish and bearish entries use opposite candle-shape and price-action conditions.
• Stops and targets are scaled using the prior candle’s range and a seven-period ATR.
• The document supplies implementation rules but no evidence of profitability or robustness.

Tags

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