This strategy was featured in the January 2010 issue of Active Trader magazine.

System Concept:
Instead of simply fading a breakout move, the following shorter term system waits for a strong confirmation of a reversal - i.e., a downside breakdown after an upside breakout or vice versa.

Strategy rules:

1. Buy the next bar at the open if the closing price is above the 40-period highest closing price no more than eight bars after a signal in the opposite direction (a close below the 30-period lowest close), and the 30-period ADX is 25 or lower.
2. Short the next bar at the open if the closing price is below the 40-period lowest closing price no more than eight bars after a signal in the opposite direction (a close above the 30-period highest close), and the 30-period ADX is 25 or lower.
3. Exit the position at the market after 30 bars.