Engulfing Patterns Filtered by the 200-Day SMA and Bollinger Midline

Summary

This strategy uses a bullish or bearish engulfing candle as an entry trigger, filtered by the direction of price relative to a 200-period simple moving average and the Bollinger Bands’ middle line. Long entries require a bullish pattern above both references; short entries require a bearish pattern below both. The Bollinger calculation uses a 14-period basis, while its outer bands are plotted but do not determine entries.

Stops are placed at the engulfing candle’s low for longs or high for shorts, with targets set at twice that entry-to-stop distance. Opposite qualifying signals also close the existing position. The document provides rules and source code, plus a BTC-USDT futures backtest configuration for a short period on three-hour bars; it reports no performance results. The approach may produce false signals in sideways markets, and its moving-average filters lag. Its fixed reward multiple and candle-based stops may also suit some volatility conditions better than others, so the stated configuration alone does not establish profitability or robustness.

Key ideas

• Engulfing candles provide entries only when price is on the matching side of both the 200-period SMA and Bollinger midline.
• The Bollinger basis uses a 14-period simple average, while the upper and lower bands are not part of the entry filter.
• Stops use the engulfing candle’s extreme, and profit targets are set at twice the stop distance.
• A qualifying opposite signal closes an existing position.
• The document describes a short BTC-USDT futures backtest setup but gives no performance results.

Tags

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