Combining a 123 Stochastic Reversal with Daily Pivot Breakouts

Summary

This script combines a reversal signal based on price movement and stochastic readings with a daily pivot breakout filter. Its reversal component tracks a position after a two-step close pattern and a relationship between fast and smoothed stochastic values around a configurable level. The pivot component calculates the central pivot from the prior day's high, low, and close, then derives first support and resistance levels. A long or short is taken only when both components point in the same direction; otherwise, the script closes positions. An option reverses the combined signal.

The document provides the indicator rules and Pine Script implementation, but no performance results or market-specific evaluation. The accompanying prose describes the stochastic conditions differently from the code, so the implementation's actual signal logic should be checked before use. The pivot filter uses only the first support and resistance levels, despite the general explanation discussing three of each. The educational warning and absence of backtest evidence limit conclusions about effectiveness.

Key ideas

• The combined strategy requires both the reversal signal and pivot signal to agree before taking a position.
• The reversal component uses a two-close pattern and fast versus smoothed stochastic values.
• The pivot levels are derived from the previous day's high, low, and close.
• A configurable option reverses long and short signals, and neutral combined signals close positions.
• The descriptive prose and code do not fully agree on the reversal conditions.

Tags

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