Failed Two-Bar Reversal Signals with Daily Directional Bias
Summary
The strategy defines bullish and bearish Failed 2 patterns after a configurable streak of consecutive candles. A bullish setup follows a bearish streak: the signal candle sweeps below the prior candle’s low, stays within its high, and closes back inside the prior range. The bearish setup mirrors these conditions after a bullish streak. Inside bars are excluded, and signals may require bar-close confirmation. The prior candle’s high or low becomes the profit target; the signal candle’s extreme, optionally adjusted by a tick buffer, defines the stop.
An optional daily-timeframe Failed 2 signal supplies directional bias, and a setting can require trades to align with it. The strategy can also skip setups if the target is no longer beyond the current close. Orders use bracket exits with the defined stop and target, and pyramiding is disabled. The page describes this as an experiment and supplies no performance statistics, tested instruments, or cost assumptions. Daily bias timing and the pattern’s sensitivity to timeframe and candle definitions should be examined when evaluating results.
Key ideas
- A bullish Failed 2 setup follows a bearish candle streak and sweeps below the prior range before closing back inside it.
- A bearish setup mirrors the pattern after a bullish streak.
- The prior candle’s opposite boundary is used as the target, while the signal candle’s extreme sets the stop.
- An optional daily Failed 2 signal can filter entries by directional bias.
- The listing reports no backtest results or transaction-cost assumptions.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.