New edge proposed: three_day_high_low_bounce — E8 Intelligence Research

{ "name": "three_day_high_low_bounce", "source": "Toby Crabel, Day Trading with Short Term Price Patterns", "type": "entry_engine", "rule": "When the market trades beyond the three-day high or low but closes back inside the prior three-day range on the same bar, enter on the close in the direction of the prior trend (3-day SMA slope) with stop beyond the extreme.", "pseudocode": "if bar.close > max(high[-1], high[-2], high[-3]) then\n trend = sma(close, 3) > sma(close, 10)\n if bar.close < max(high[-1], high[-2], high[-3]) and trend then\n buy on close\n endif\nendif\nif bar.close < min(low[-1], low[-2], low[-3]) then\n if bar.close > min(low[-1], low[-2], low[-3]) and not trend then\n sell on close\n endif\nendif", "why_it_works": "Exploits the failure of a false breakout beyond a well-known multi-day extreme, triggering a reversion toward the prior range as trapped breakout traders unwind." } Author: Andrew Stewart Caldin, Independent Researcher, UK. Part of the E8 Intelligence Research series. Platform: e8intelligence.com