Markets often retrace a portion of a prior move before resuming trend. This strategy identifies recent swing highs and lows and watches for price to test the 61.8% or 78.6% retracement levels. These areas frequently mark exhaustion points.
The algorithm tracks swings over a rolling window and calculates Fibonacci levels between them. When price nears a key retracement and forms a candle in the direction of the original trend, a trade is opened with a stop placed a set percent away. Targets are around the 50% midpoint of the swing.
By focusing on deep pullbacks within an existing trend, the method aims to capture the early stages of a continuation move after sellers or buyers have briefly taken control.
Entry Criteria: Price tests 61.8% or 78.6% retracement and prints a confirming candle.
Long/Short: Both depending on trend.
Exit Criteria: Price reaching the 50% level or stop-loss.
Stops: Yes, percentage based.
Default Values:
SwingLookbackPeriod = 20
FibLevelBuffer = 0.5
CandleType = 5 minute
StopLossPercent = 2
[*]Filters:
Category: Trend following
Direction: Both
Indicators: Fibonacci levels
Stops: Yes
Complexity: Advanced
Timeframe: Intraday
Seasonality: No
Neural networks: No
Divergence: No
Risk level: Medium