Three-Close Reversal Entries with a Breakout Filter

Summary

The document describes a reversal setup attributed to John Carter: after a trend changes, wait for three consecutive lower closes before entering short, or three consecutive higher closes before entering long. It adds a filter intended to avoid signals during flag-like consolidation. For a short setup, the last two closes must fall below the first candle’s low; for a long setup, they must rise above the first candle’s high.

The accompanying indicator marks the third candle as the proposed entry point, whereas the original indicator is said to mark the first candle in the pattern. The author also cautions that later same-color arrows after the initial reversal signal should be ignored while already in a position. The document provides the rule description and indicator logic, but no historical test, market, timeframe, exit method, or risk controls. It therefore explains a signal pattern rather than establishing its profitability or suitability across instruments.

Key ideas

• The short signal requires three successively lower closes after a trend reversal.
• The long signal requires three successively higher closes after a trend reversal.
• The filter checks that the last two closes exceed the first candle’s range in the signal direction.
• The described indicator marks the third candle as the entry point.
• The post gives no performance testing or exit and risk-management rules.

Tags

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