5-day High-Low Breakout Price Channel Strategy
This strategy is named "5-day High-Low Breakout Price Channel Strategy". It constructs a price channel using the highest high and lowest low prices over the past 5 trading days, and trades breakouts of the channel.
The steps are:
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Calculate the highest high and lowest low prices over the past 5 trading days.
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Take the top 2 highest high prices to build the upper rail, and the bottom 2 lowest low prices for the lower rail.
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When price rises above the upper rail by a certain percentage (e.g. 0.3%), a buy signal is generated.
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When price drops below the lower rail by a certain percentage, a sell signal is generated.
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After entry, the second highest/lowest price is used as the stop loss, or take profit at a certain percentage (e.g. 0.5%) is tracked before exiting.
The advantage is using key high/low price breakouts to determine trend reversal points. Breaking the channel represents concentrated price-volume thrusts. But over-trading in ranging markets should be prevented.
In summary, watching key price area breakouts is a classical trend following approach. But traders still need confirmation with other indicators and parameter optimization to maximize the strategy's utility.
/*backtest
start: 2023-08-13 00:00:00
end: 2023-09-12 00:00:00
period: 4h
basePeriod: 15m
exchanges: [{"eid":"Futures_Binance","currency":"BTC_USDT"}]
*/
// @version=4
// Based on Sort pseudo-array v2 by apozdnyakov https://www.tradingview.com/script/IUlIoSnA-Sort-pseudo-array-v2/
strategy(title="5 Day high/low breakout strategy", shorttitle="5 days range breakout", overlay=true)- 1