This strategy is based on reversal patterns (hammer, engulfing, and doji) and support and resistance levels in technical analysis, trading on a 1-hour chart. The strategy identifies potential market reversal points and executes trades with predefined take profit and stop loss levels.
The main idea of the strategy is to enter a long position when a bullish reversal pattern (such as a hammer, bullish engulfing, or doji) appears near a support level, and to enter a short position when a bearish reversal pattern (such as a hammer, bearish engulfing, or doji) appears near a resistance level. Take profit and stop loss levels are set to control risk and lock in profits.
Solutions:
This strategy captures potential trading opportunities by identifying reversal patterns near support and resistance levels. It is simple to use and applicable to different market environments. However, the success of the strategy depends on the accurate identification of reversal patterns and support and resistance levels. By optimizing the confirmation conditions of trading signals, incorporating other technical indicators, and dynamically adjusting take profit and stop loss levels, the performance of the strategy can be further improved.
/*backtest start: 2024-05-07 00:00:00 end: 2024-06-06 00:00:00 period: 2h basePeriod: 15m exchanges: [{"eid":"Futures_Binance","currency":"BTC_USDT"}] */ // This Pine Script™ code is subject to the terms of the Mozilla Public License 2.0 at https://mozilla.org/MPL/2.0/ // © Kingcoinmilioner //@version=5 strategy("Reversal Patterns at Support and Resistance", overlay=true, default_qty_type=strategy.percent_of_equity, default_qty_value=100) // Parameters support_resistance_lookback = input.int(50, title="Support/Resistance Lookback Period") reversal_tolerance = input.float(0.01, title="Reversal Tolerance (percent)", step=0.01) / 100 take_profit_percent = input.float(3, title="Take Profit (%)") / 100 stop_loss_percent = input.float(1, title="Stop Loss (%)") / 100 // Functions to identify key support and resistance levels findSupport() => ta.lowest(low, support_resistance_lookback) findResistance() => ta.highest(high, support_resistance_lookback) // Identify reversal patterns isHammer() => body = math.abs(close - open) lowerWick = open > close ? (low < close ? close - low : open - low) : (low < open ? open - low : close - low) upperWick = high - math.max(open, close) lowerWick > body * 2 and upperWick < body isEngulfing() => (close[1] < open[1] and close > open and close > open[1] and open < close[1]) (close[1] > open[1] and close < open and close < open[1] and open > close[1]) isDoji() => math.abs(open - close) <= (high - low) * 0.1 // Identify support and resistance levels support = findSupport() resistance = findResistance() // Check for reversal patterns at support and resistance hammerAtSupport = isHammer() and (low <= support * (1 + reversal_tolerance)) engulfingAtSupport = isEngulfing() and (low <= support * (1 + reversal_tolerance)) dojiAtSupport = isDoji() and (low <= support * (1 + reversal_tolerance)) hammerAtResistance = isHammer() and (high >= resistance * (1 - reversal_tolerance)) engulfingAtResistance = isEngulfing() and (high >= resistance * (1 - reversal_tolerance)) dojiAtResistance = isDoji() and (high >= resistance * (1 - reversal_tolerance)) // Trading logic if (hammerAtSupport or engulfingAtSupport or dojiAtSupport) strategy.entry("Long", strategy.long) stop_level = low * (1 - stop_loss_percent) take_profit_level = close * (1 + take_profit_percent) strategy.exit("Take Profit/Stop Loss", from_entry="Long", stop=stop_level, limit=take_profit_level) if (hammerAtResistance or engulfingAtResistance or dojiAtResistance) strategy.entry("Short", strategy.short) stop_level = high * (1 + stop_loss_percent) take_profit_level = close * (1 - take_profit_percent) strategy.exit("Take Profit/Stop Loss", from_entry="Short", stop=stop_level, limit=take_profit_level) // Plot support and resistance levels for visualization plot(support, color=color.green, linewidth=1, title="Support Level") plot(resistance, color=color.red, linewidth=1, title="Resistance Level") // Plot reversal patterns on the chart for visualization plotshape(series=hammerAtSupport, location=location.belowbar, color=color.green, style=shape.labelup, text="Hammer at Support") plotshape(series=engulfingAtSupport, location=location.belowbar, color=color.green, style=shape.labelup, text="Engulfing at Support") plotshape(series=dojiAtSupport, location=location.belowbar, color=color.green, style=shape.labelup, text="Doji at Support") plotshape(series=hammerAtResistance, location=location.abovebar, color=color.red, style=shape.labeldown, text="Hammer at Resistance") plotshape(series=engulfingAtResistance, location=location.abovebar, color=color.red, style=shape.labeldown, text="Engulfing at Resistance") plotshape(series=dojiAtResistance, location=location.abovebar, color=color.red, style=shape.labeldown, text="Doji at Resistance")template: strategy.tpl:40:21: executing "strategy.tpl" at <.api.GetStrategyListByName>: wrong number of args for GetStrategyListByName: want 7 got 6