Support Breakdown and ATR Trail Reversal Entry with Risk-Reward Target

Summary

This document describes a long-only reversal setup that waits for price to break below a recent low channel before looking for a recovery. The channel is based on prior lows over a configurable lookback. After a breakdown, the strategy initializes a stop-like level above price using the average true range (ATR), then updates that level with recent swing highs and ATR. A buy entry occurs when the close crosses above this descending trail, and any existing long position is closed when a new downside break is detected.

The profit target is calculated from the difference between the average entry price and the channel low, multiplied by a risk-reward setting; the example uses a multiplier of 2. The document explains the intended sequence but supplies no backtest results, market, or performance evidence. Its code does not show a separate protective stop for an open long, and the target check uses the closing price. The risk calculation can also become questionable if entry is at or below the referenced channel level. These details limit what can be inferred about realized risk or profitability.

Key ideas

• A break below a recent low channel activates a possible long reversal setup rather than an immediate entry.
• The entry trigger is a close crossing above a trailing level built from ATR and recent swing highs.
• The profit target uses entry-to-channel distance multiplied by a configurable risk-reward factor.
• A new downside break closes an existing long position and begins a fresh setup.
• The document gives no test evidence, and its code does not specify a distinct protective stop for open positions.

Tags

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