New edge proposed: inside_bar_breakout_with_prior_extreme_filter — E8 Intelligence Research

{ "name": "inside_bar_breakout_with_prior_extreme_filter", "source": "Al Brooks, 'Reading Price Charts Bar by Bar'", "type": "entry_engine", "rule": "Enter long on a close above the high of the most recent inside bar (a bar whose high is <= prior bar high and low >= prior bar low), provided that the inside bar's close is above the 20-period SMA and the breakout bar's range is at least 0.5 ATR; stop at the inside bar's low, target at 2x risk.", "pseudocode": "if bar[1].high <= bar[2].high and bar[1].low >= bar[2].low and bar[1].close > sma(close,20)[1]:\n entry = close > bar[1].high\n if entry:\n stop = bar[1].low\n target = entry + 2*(entry - stop)\n risk = (entry - stop)/atr(14) >= 0.5", "why_it_works": "Inside bars indicate temporary consolidation at a support/resistance level, and a breakout with momentum (volume/range expansion) often leads to a strong directional move." } Author: Andrew Stewart Caldin, Independent Researcher, UK. Part of the E8 Intelligence Research series. Platform: e8intelligence.com