TTM Falcon Reversal Signals from Three-Bar Price Patterns

Summary

This note describes a reversal strategy that compares closing prices across three consecutive bars. A change in the direction signal, combined with a qualifying close relative to the first bar, triggers a buy or sell indication. The accompanying implementation maintains a directional state and enters long or short positions accordingly; an option can invert the direction.

The document explains the approach but supplies no performance results. Its claims of quick signals and fewer unnecessary trades are not supported by reported testing data, and the signal timing depends on confirmation from later bars. The note itself warns that volatile or choppy markets can produce inaccurate or frequent signals, and that the method does not determine how long a reversal will last. It recommends testing parameter choices across market conditions and using stop losses, but does not specify a complete position-sizing or risk-control framework.

Key ideas

• The strategy derives reversal signals by comparing closing prices across three bars.
• A signal state determines whether a qualifying pattern triggers a long or short position.
• The implementation includes an option to reverse the trading direction.
• Choppy or highly volatile conditions may produce unreliable or frequent signals.
• The document offers no backtest results and recommends testing parameters and using stop losses.

Tags

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