Fibonacci Retracements and TSOT Signals for Trend Reversals

Summary

This strategy combines rolling Fibonacci retracement levels with a Trend Strength Over Time (TSOT) measure to identify possible reversals. It derives retracement levels from a recent high-low range, then uses percentile comparisons across multiple lookback windows to classify bullish or bearish strength. Long entries require price to clear designated retracement thresholds alongside a bullish TSOT reading; short entries apply corresponding downside conditions. The approach can reverse positions when an opposite signal appears.

Risk controls use an ATR-based stop and a staged exit: a partial take-profit closes part of the position at an initial target, with the remainder managed against a further target or a return to break-even. The document lists BTC/USDT futures settings with daily bars and hourly base data over about a year, but reports no performance statistics. It cautions that frequent reversals can overtrade in choppy markets and that extreme moves can still cause drawdowns. Parameter choices and the described signals therefore require market-specific testing.

Key ideas

• Retracement levels are calculated from a rolling high-low range to mark possible reversal areas.
• TSOT estimates directional strength through percentile comparisons across several lookback windows.
• Entries combine price thresholds with bullish or bearish TSOT readings.
• ATR-based stops and staged profit-taking manage exits, with optional position reversals.
• The published example contains settings but no performance results, and choppy conditions may trigger excessive reversals.

Tags

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