In the comments of my last published idea, user SignalTradersUK was very kind and suggested I try the following in my next study:
"i think your next study should be, to workout what to do after the Moving Average cross! If you look just on the chart you have posted, Price would appear to always come back to the levels where the 2 MA's cross and then go back in the direction of the crossing of the MA's. It's a great pull back strategy."
I'm really just beginning to learn about coding strategies so I'm not 100% sure I correctly understood his suggestion.
I admit I had difficulties wrapping my head around how to do this.
Anyway, the result is a strategy which runs alongside the main Moving Average Crossover.
When the fast and slow MA cross the strategy traces back 40 days to find a swing low.
This swing low and the price at the MA cross is used to calculate a fib .
The price at this is used to place a Pullback short order.
Since we're shorting a bull trend, a tight stop is used.
If the pullback reaches down to the fib 0.618 we take profit (close the short).
Like I said, I don't know if I correctly understood SignalTradersUK feedback, but I really appreciate the
feedback and advice!
As always I'm hoping to learn from the community, so all feedback, corrections and advice is very welcome!
//@version=2 strategy("MAC Pullback", overlay=true) // Setting up timeperiod for testing startPeriodYear = input(2014, "Backtest Start Year") startPeriodMonth = input(1, "Backtest Start Month") startPeriodDay = input(2, "Backtest Start Day") testPeriodStart = timestamp(startPeriodYear, startPeriodMonth, startPeriodDay, 0, 0) stopPeriodYear = input(2015, "Backtest Stop Year") stopPeriodMonth = input(12, "Backtest Stop Month") stopPeriodDay = input(30, "Backtest Stop Day") testPeriodStop = timestamp(stopPeriodYear, stopPeriodMonth, stopPeriodDay, 0, 0) // Moving Averages ema14 = ema(close, 14) ema28 = ema(close, 28) sma56 = sma(close, 56) // Plot plot(ema14, title="ema14", linewidth=2, color=green) plot(ema28, title="ema28", linewidth=2, color=red) plot(sma56, title="sma56", linewidth=3, color=blue) // Strategy goLong = cross(ema14, sma56) and ema14 > ema28 goShort = cross(ema14, sma56) and ema14 < ema28 // Locate Swing Lows leftBars = input(20) rightBars=input(20) swinglow = pivotlow(close, leftBars, rightBars) plot(swinglow, style=cross, linewidth=8, color=#00FF00, offset=-rightBars) if goLong == true and time >= testPeriodStart and time <= testPeriodStop // We try to make sure that we're catching the first Pullback after the crossover if ema14 < sma56 pivotpoint = lowest(40) //lowest value of the month as our swing low // We calculate a Fib 1.272 extension (from the previous swing low to // the crossover long entry's open) and use this as our entry target to short the Pullback extensiontarget = ((close - pivotpoint) * 1.27) + pivotpoint shorttarget = ((close - pivotpoint) * 0.618) + pivotpoint strategy.order("Pullback", strategy.short, 5.0, limit=extensiontarget) // I would like to use a trailing stop but for know we just hope to get // filled if the pullback reaches all the way down to the 0.618. // We also place a tight stop loss since we trying to short an uptrend strategy.exit("Pullback Exit", "Pullback", limit=shorttarget, loss=400)