Combining 123 Reversal Signals with Fractal Chaos Band Breaks

Summary

This chart indicator combines a 123-style reversal signal with Fractal Chaos Bands. The reversal component compares recent closes and the relationship between fast and slow stochastic values around a threshold. The band component identifies recent fractal highs and lows; a close above the upper level sets a bullish state, while a close below the lower level sets a bearish state. The indicator colors bars only when both components agree, leaving other bars neutral.

The accompanying explanation treats sloping bands as a sign of directional movement and flatter bands as a sign of choppier conditions. The fractal levels are based on surrounding highs and lows, so the lookback pattern determines how much price fluctuation is filtered. Although the description refers to trading opportunities, this script is an indicator rather than a complete strategy: it specifies no order sizing, stop, target, or backtest evidence. It also does not establish that the combined signals are profitable or robust across markets and timeframes.

Key ideas

• The indicator combines a stochastic and price-based reversal rule with a fractal-band direction state.
• Bullish or bearish bar coloring requires both components to agree.
• Fractal highs and lows define band levels, and the selected pattern controls their lookback structure.
• The script provides visual signals but no execution, risk-management, or performance evaluation rules.

Tags

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