Smart Momentum Scanner STRAT — Strategy by PUNJAB64
By PUNJAB64
Performance Metrics
- Author: PUNJAB64
Description
# Smart Momentum Scanner STRAT — Support, Reversal & Trend Continuation**Author: PUNJAB64**## OverviewSmart Momentum Scanner STRAT is a price-action-based trading strategy designed to identify potential bullish reversals, higher-low formations, and trend-continuation opportunities.Rather than generating buy signals simply because price touches a support level or crosses a moving average, the strategy follows a structured confirmation process:**Support → Reversal → Higher Low → Continuation → Momentum Confirmation → Potential Buy**The strategy combines market structure, exponential moving averages (EMAs), volume confirmation, VWAP, and optional broader-market and sector filters to identify potential long-entry opportunities.It also incorporates ATR-based stop-loss calculations, risk-based position sizing, and configurable exit rules.The primary objective is to help traders identify bullish setups with evidence of improving price structure and momentum rather than relying on a single indicator.## 1. Market Structure: The FoundationThe strategy begins by identifying potential support using confirmed pivot lows.Once a support level is established, it monitors price for a potential bullish reversal.A valid reversal requires:* Price to test the identified support zone.* A bullish candle to form.* The candle to close above the previous candle's high.This combination provides an initial indication that buying pressure may be returning near support.**Important:** A support touch alone does not trigger a buy signal.## 2. Higher-Low ConfirmationAfter a reversal is identified, the strategy waits for a confirmed pivot low above the original support level.This higher low indicates that price has pulled back without revisiting the previous support level.The purpose is to identify improving market structure before considering a continuation entry.The setup is invalidated if price closes below the original support level.## 3. Breakout and ContinuationOnce a higher low is confirmed, the strategy waits for price to close above the high of the original reversal candle.This is the continuation trigger.The breakout must then satisfy the strategy's momentum and confirmation filters before a buy signal can be generated.This approach seeks to avoid entering solely because price rebounds from support, instead waiting for evidence that bullish momentum is continuing.## 4. EMA Trend and Recovery FiltersThe strategy uses four configurable exponential moving averages:* **EMA 9:** Short-term momentum.* **EMA 20:** Near-term trend and price recovery.* **EMA 50:** Intermediate trend direction.* **EMA 200:** Longer-term trend context.It identifies two types of bullish conditions.**Early Recovery BUY**This setup requires:* Price above EMA 20.* EMA 9 above EMA 20.* EMA 20 rising relative to its value five bars earlier.It is designed to identify improving momentum before all longer-term trend conditions are established.**Trend BUY**This setup requires:* Price above EMA 200.* EMA 9 above EMA 20.* EMA 20 above EMA 50.* EMA 200 rising relative to its value five bars earlier.This represents a more established bullish trend structure.Both setups must satisfy the strategy's remaining entry conditions.## 5. Volume ConfirmationThe strategy compares current volume with its 20-bar average volume.By default, volume must be at least 1.20 times average volume.This filter is intended to confirm that the potential entry has sufficient trading activity behind it.The volume length and confirmation multiplier can be adjusted in the strategy settings.## 6. VWAP ConfirmationVWAP is enabled as an entry filter by default.When enabled, the current closing price must be above VWAP for a buy signal to qualify.This provides an additional price-position confirmation alongside market structure, moving averages, and volume.VWAP confirmation can be disabled through the settings.## 7. Optional Market and Sector ConfirmationThe strategy includes optional filters for broader-market and sector conditions.Default reference symbols:* **SPY:** Broad U.S. equity market.* **SMH:** Semiconductor sector.When enabled, the selected market ETF and sector ETF must each trade above their respective 20-period EMAs on the chart's timeframe.These filters are optional and can be enabled or disabled independently.The default settings do not require either filter.Traders should select reference ETFs appropriate for the security and sector being analyzed.## 8. Risk Management and Position SizingRisk management is an integral part of the strategy.The script calculates position size using account equity, the selected risk percentage, and the estimated distance between the entry price and stop level.Default risk settings:* **Risk per trade:** 1% of strategy equity.* **Maximum position size:** 100% of strategy equity.* **ATR length:** 14 bars.* **Maximum stop distance:** 3 ATR.* **Structure stop buffer:** 0.25 ATR.When structure-based stops are enabled, the stop is placed below the identified support level, adjusted by the ATR buffer. The stop distance is capped by the configured maximum ATR distance.If structure-based stops are disabled, the strategy uses an ATR-based stop distance instead.Position size is limited by both the risk calculation and the maximum position percentage.These calculations are estimates and do not guarantee that realized losses will remain within the selected risk percentage. Gaps, slippage, liquidity, and execution conditions can cause larger losses.## 9. Exit ManagementThe strategy provides several configurable exit mechanisms.**ATR-Based Stop-Loss**An initial stop level is calculated using market structure or the ATR-based fallback method.**EMA 20 Exit**Enabled by default. The strategy closes a long position when price closes below EMA 20.**Support-Break Exit**Optional. When enabled, the strategy closes a long position if price closes below the support level recorded for the trade.**ATR-Based Take Profit**Optional and disabled by default. When enabled, the strategy sets a profit target at a configurable ATR multiple above the entry price.The default target distance is 4 ATR.**Maximum Holding Period**Optional and disabled by default. Traders can specify a maximum number of chart bars to hold a position.These settings allow traders to adapt exit behavior to their preferred trading timeframe and holding period.## 10. Chart Visuals and AlertsThe strategy plots:* EMA 9, EMA 20, EMA 50, and EMA 200.* VWAP.* Identified support levels.* Higher-low levels.* Reversal-candle highs.* Support and reversal labels.* Continuation labels.* Early Recovery BUY and Trend BUY signals.* Setup invalidation markers.* Trade entry and exit markers.A status table displays the current setup state, position status, ATR value, current stop price, and last signal type.Available alert conditions include:* Early Recovery BUY.* Trend BUY.* Support Invalidated.Alerts help traders monitor potential setups without continuously watching every chart.## 11. Configurable Strategy SettingsThe script allows users to adjust:* EMA periods.* Average-volume length and volume multiplier.* Pivot confirmation parameters.* Support-zone tolerance.* VWAP confirmation.* Market and sector confirmation.* Stop-loss calculation method.* ATR stop buffer and maximum stop distance.* EMA 20 and support-break exits.* Take-profit settings.* Maximum holding period.* Risk per trade.* Maximum position allocation.The default settings are starting parameters, not universally optimal values.## Intended UseSmart Momentum Scanner STRAT is designed primarily for traders who prefer structured bullish setups based on support, price action, trend development, and continuation confirmation.It may be useful for analyzing individual stocks and ETFs across different chart timeframes.The strategy focuses on long positions. It does not currently implement a short-selling entry system.Traders should evaluate the strategy on the relevant security and timeframe before using it with real capital.## Important Limitations* Confirmed pivot points require subsequent bars, so support and higher-low confirmation are not immediate.* A bullish signal does not guarantee continuation or profitability.* EMA, VWAP, and volume filters can delay entries or exclude otherwise valid setups.* Results can vary substantially by security, timeframe, market regime, and parameter selection.* Backtest results depend on the strategy's execution assumptions, commissions, and slippage settings.* Historical performance does not guarantee future results.This script is an analytical and backtesting tool, not financial advice. Traders are responsible for their own research, risk management, and trading decisions.**Core principle: Do not buy merely because price touches support. Wait for a reversal, a higher low, a continuation breakout, and the required momentum confirmations.**