Long Reversals After a Gap Below the Prior Day’s Low

Summary

This long strategy identifies a reversal bar after a bearish prior day: the current bar opens below the prior low and closes above its own open. The script enters long when the condition occurs after a user-selected start date. While a position is open, it maintains a trailing stop based on a configurable percentage of the current bar’s open; the stop level can rise but does not move lower. The description frames the pattern as a possible short-covering catalyst and suggests considering the broader trend and each symbol’s volatility when choosing a stop distance.

The document reports that a chart example used SHOP, but supplies no detailed performance statistics. Its description initially misstated entry timing and a later note clarifies that entry occurs at the next day’s open after the reversal condition. Results therefore depend on the platform’s order timing and may differ from discretionary entries at the reversal close or next open. The stop percentage is adjustable, and the author cautions that it may need to vary with instrument volatility.

Key ideas

• The setup requires a bearish prior bar, an opening price below its low, and a bullish close on the current bar.
• A qualifying reversal triggers a long entry after the condition is recognized, with the description clarifying next-day-open timing.
• The adjustable trailing stop is calculated from the bar open and ratchets upward while a long position is held.
• The author suggests considering instrument volatility and prevailing trend when evaluating the setup and stop distance.
• The document offers no detailed performance statistics, and results may differ with alternative entry timing.

Tags

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