Opposite-Candle Failed Reversals with Volume Confirmation

Summary

This strategy looks for a two-candle failed reversal. It enters long when a bullish prior candle is followed by a bearish candle whose low does not fall below the prior low; it enters short when a bearish candle is followed by a bullish candle whose high does not exceed the prior high. In either case, the current candle must have greater volume than the previous one.

The rules exclude current candles classified as dojis, hammers, or hanging men, using body size and wick relationships to define those patterns. The script places long or short entries when the conditions occur and describes itself as backtestable. It does not specify a separate exit rule or provide backtest results, so the entry logic alone is insufficient to assess profitability or risk. The document gives no evidence that higher volume or the candle filters improve outcomes across instruments or timeframes; those assumptions require independent testing with realistic costs and execution conditions.

Key ideas

• The long setup pairs a bullish prior candle with a bearish candle that holds above the prior low.
• The short setup pairs a bearish prior candle with a bullish candle that stays below the prior high.
• Both setups require current volume to exceed the previous candle’s volume.
• Doji, hammer, and hanging-man shaped candles are filtered out.
• The described rules provide entries but no separate exit logic or reported performance evidence.

Tags

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