Confirming 123 Reversal Signals with the Percentage Volume Oscillator

Summary

This strategy combines a 123 reversal signal with the Percentage Volume Oscillator (PVO), taking a position only when both components point in the same direction. The reversal component uses recent closing-price patterns and stochastic conditions; the PVO compares short- and long-period volume exponential averages and evaluates their relationship with a signal average. When the two component signals disagree, the strategy closes existing positions. The source includes configurable stochastic and PVO lengths and an option to reverse trades.

The document presents the combination as a way to filter signals using both price and volume, and says it is intended for medium- to long-term holding. It reports generally favorable backtest performance but gives no return, drawdown, or trade-count figures. The published settings show only a brief BTC futures test, which is insufficient to establish durable results. The written description of the reversal conditions also differs from the source’s implemented conditions, so the precise rule set should be checked before interpreting or reproducing the strategy. Parameter sensitivity and drawdowns remain concerns.

Key ideas

• The strategy enters only when the 123 reversal and PVO signals agree in direction.
• The reversal component uses price patterns together with stochastic conditions.
• The PVO compares short- and long-term volume averages and a signal average.
• The strategy closes positions when its combined directional signal is neutral.
• The short test and discrepancies between the description and source limit confidence in the reported performance.

Tags

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