Multi Level Support Resistance Momentum Reversal Trading Strategy

Pine ScriptMean reversion Momentum Trend following RSI Fibonacci Volume Pivots / S&R

Author: ChaoZhang
Complexity: Starter · 69 lines
Parameters: 0
Backtest bar: 1h · intraday
Tested on: BTC/USDT · futures

Jump to code View in vault Original on FMZ

Overview

This strategy is a multi-dimensional trading system that combines Fibonacci retracement, pivot points, and the Relative Strength Index (RSI). It captures potential trading opportunities by identifying key support/resistance levels and market overbought/oversold conditions. The strategy employs multiple technical indicators for cross-validation, enhancing the reliability of trading signals.

Strategy Principles

The core logic is based on the synergy of three key components:

Fibonacci retracement levels (38.2%, 50%, 61.8%) determine potential support/resistance zones, automatically calculated from highs and lows.
The pivot point system identifies swing highs and lows using a 14-period window, helping determine market structure.
RSI indicator uses a 14-period setting to identify overbought (>70) and oversold (<30) conditions.

Trade signal triggers:

Buy signal: Price bounces from Fibonacci retracement levels with RSI in oversold territory
Sell signal: Price rejects from Fibonacci retracement levels with RSI in overbought territory

Strategy Advantages

Multi-dimensional analysis improves trading accuracy through cross-validation of technical indicators.
Strong adaptability with automatic adjustment of support/resistance levels based on market volatility.
Comprehensive risk management through percentage-based position sizing.
Excellent visualization allowing traders to intuitively understand market structure and trading signals.

Strategy Risks

Support/resistance levels may become less effective in highly volatile markets.
Multiple indicators might lead to lagging signals, affecting entry timing.
Strategy performance may be suboptimal during strong trend periods.

Risk control recommendations:

Set appropriate stop-loss levels to avoid significant losses
Trade cautiously during major economic data releases
Incorporate higher timeframe trend analysis

Strategy Optimization Directions

Indicator Parameter Optimization:
- Consider adjusting RSI periods and thresholds for different market conditions
- Optimize pivot point calculation periods to improve turning point identification
Signal Filtering:
- Add volume confirmation
- Introduce trend filters to avoid reversal trades during strong trends
Risk Management Enhancement:
- Implement dynamic stop-loss mechanisms
- Adjust position sizes based on volatility

Summary

This is a comprehensive trading system based on multiple technical indicators, capturing market reversal opportunities through the combination of support/resistance levels and momentum indicators. The strategy's strength lies in its multi-dimensional analysis approach and robust risk management mechanisms, but users need to be aware of market conditions' impact on strategy performance and optimize parameters according to actual circumstances.

Source Pine Script

/*backtest
start: 2024-02-18 00:00:00
end: 2025-02-16 08:00:00
period: 1h
basePeriod: 1h
exchanges: [{"eid":"Futures_Binance","currency":"BTC_USDT"}]
*/

//@version=5
strategy("Fibonacci Retracement + Pivot Points + RSI Strategy", overlay=true, default_qty_type=strategy.percent_of_equity, default_qty_value=20)

// --- Fibonacci Retracement Parameters ---
var float fib_low = na
var float fib_high = na

if (ta.change(close) > 0)
    fib_low := na(fib_low) ? close : math.min(fib_low, close)
    fib_high := na(fib_high) ? close : math.max(fib_high, close)

fib_0 = fib_low
fib_100 = fib_high
fib_38 = fib_high - (fib_high - fib_low) * 0.382
fib_50 = fib_high - (fib_high - fib_low) * 0.5
fib_61 = fib_high - (fib_high - fib_low) * 0.618

plot(fib_0, color=color.green, title="Fib 0%")
plot(fib_38, color=color.blue, title="Fib 38.2%")
plot(fib_50, color=color.orange, title="Fib 50%")
plot(fib_61, color=color.red, title="Fib 61.8%")
plot(fib_100, color=color.green, title="Fib 100%")

// --- Pivot Points Parameters ---
pp_length = 14
pivot_high = ta.pivothigh(high, pp_length, pp_length)
pivot_low = ta.pivotlow(low, pp_length, pp_length)
plot(pivot_high, color=color.red, style=plot.style_cross, title="Pivot High")
plot(pivot_low, color=color.green, style=plot.style_cross, title="Pivot Low")

// --- RSI Parameters ---
rsi_length = 14
rsi_overbought = 70
rsi_oversold = 30
rsi = ta.rsi(close, rsi_length)
plot(rsi, color=color.purple, title="RSI")
hline(rsi_overbought, "Overbought", color=color.red)
hline(rsi_oversold, "Oversold", color=color.green)

// --- Buy and Sell Conditions ---
// Buy Condition:
// - Price bounces from Fibonacci retracement levels (38.2%, 50%, or 61.8%)
// - RSI is below oversold level (30)
buyCondition = (close > fib_38 or close > fib_50 or close > fib_61) and rsi < rsi_oversold

// Sell Condition:
// - Price rejects from Fibonacci retracement levels (38.2%, 50%, or 61.8%)
// - RSI is above overbought level (70)
sellCondition = (close < fib_38 or close < fib_50 or close < fib_61) and rsi > rsi_overbought

// Plot Buy/Sell Signals
plotshape(series=buyCondition, title="Buy Signal", location=location.belowbar, color=color.green, style=shape.labelup, text="BUY")
plotshape(series=sellCondition, title="Sell Signal", location=location.abovebar, color=color.red, style=shape.labeldown, text="SELL")

// --- Execute Trades ---
if (buyCondition)
    strategy.entry("Long", strategy.long)

if (sellCondition)
    strategy.close("Long")

Published by ChaoZhang on the FMZ strategy square · last modified 2025-02-18. Collected in the Quant Trading Vault. Unvalidated research: re-test with your own data and costs before trusting it.

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