Dual Confirmation with 123 Reversal and SMI Ergodic Signals

Summary

This strategy combines a 123 Reversal rule with an SMI Ergodic oscillator and trades only when both indicators point in the same direction. The reversal component uses recent closing-price patterns and stochastic conditions around a threshold; the oscillator smooths price changes and compares its value with upper and lower guides. When the signals agree, the strategy enters long or short, and it closes positions when they no longer align.

The document gives adjustable indicator settings and backtest configuration for BTC/USDT futures, but no performance statistics. It highlights false reversal signals, missed turns, drawdown, and the need to tune parameters across instruments and timeframes. It also recommends adding stop-loss controls, though the supplied rules do not define a stop-loss or profit target. The prose and source implementation differ in some details of the reversal conditions, so the exact signal definition should be checked before attempting to reproduce the strategy.

Key ideas

• The strategy requires agreement between a 123 Reversal signal and an SMI Ergodic signal before taking a position.
• The reversal component combines short sequences of closing-price changes with stochastic oscillator conditions.
• The SMI Ergodic component smooths price changes and uses configurable upper and lower guides.
• Backtest settings are provided, but performance results and explicit stop-loss rules are absent.
• The prose and source code describe some reversal conditions differently, creating implementation ambiguity.

Tags

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