Combining 123 Reversal Signals with Floor Trader Pivot Levels

Summary

This strategy combines a stochastic-based 123 reversal signal with daily floor-trader pivot levels. The reversal component compares recent closes and fast and slow stochastic values to assign a persistent long or short state. The pivot component derives a central pivot and first support and resistance from the previous day’s high, low, and close, then sets direction when price moves above resistance or below support.

A trade is entered only when both components agree: long above the first resistance with a bullish reversal state, or short below the first support with a bearish state. When their directions do not match, the script closes positions. A reverse option can invert the combined direction. The document describes the rules and default inputs, but supplies no performance results or risk-adjusted evidence. Its cited educational origin and stated educational-use warning do not establish an edge; behavior may also depend on chart timeframe and execution assumptions.

Key ideas

• The reversal signal combines a two-step close pattern with fast and slow stochastic comparisons.
• The pivot levels use the prior day’s high, low, and close to calculate the central pivot and first support and resistance.
• A position is taken only when the reversal and pivot components signal the same direction.
• The strategy closes positions when the combined signal is neutral and allows the direction to be reversed.

Tags

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