Combining a 123 Reversal Signal with Elder Ray Bull Power

Summary

This strategy combines a 123-style reversal rule with Elder Ray bull and bear power. The reversal component uses two consecutive closes in one direction and a 9-period stochastic condition: a long requires a low slow stochastic reading, while a short requires a high fast stochastic reading. Elder Ray compares the day's high and low with a 13-period EMA to estimate buying and selling pressure. The strategy acts only when the two components agree on direction.

The document describes the indicators and their rationale but provides no performance results. Published settings list a 14-period stochastic length, smoothing inputs, a threshold of 50, a 13-period Elder Ray length, and a zero trigger; the accompanying backtest metadata specifies BTC/USDT futures over a short historical window. The text flags sparse signals and premature entries during sideways action. It suggests parameter testing, trend filtering, and stop losses, but does not report evidence that these additions or the strategy itself are profitable.

Key ideas

• The reversal rule combines consecutive closes with stochastic oscillator conditions to identify possible turning points.
• Elder Ray bull and bear power measure the distance between daily extremes and a 13-period EMA.
• The strategy enters only when reversal and Elder Ray signals point in the same direction.
• Agreement between the indicators may reduce signal frequency, and range-bound movement can still cause premature entries.
• The document supplies settings and a backtest period but reports no measured performance.

Tags

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