K.T Bottom Snipper

🔵OVERVIEW
A trend reversal signal tool which combines ichimoku cloud, fibonacci extension with multiple levels of standard deviation levels and exponential moving average to capture short term bottom on US500 or E-Mini S&P futures chart.

🔵CREDITS
This indicator combines the public indicators below but re-coded to better suit for the purpose of finding short term bottoms.

• Ichimoku cloud
  
• Moving average exponential
  
• Linear regression channel
  

Additionally, credits to Rashad for his popular open-sourced script “Fibonacci Bollinger Bands”. My scalp indicator uses that concept to capture the short term oversold conditions.

🔵 CONCEPTS

• Oversold Conditions: Detect if price is falling under 2 to 3 standard deviation of fibonacci extension levels. At those levels, it has higher possibility to stabilize and revert to the mean in short term
  
• EMA cut over: Calculate if the price is cutting over and under key EMA with strong down force. The key EMA usually acts as reverting mean, once cut over, in the short term it tends to revisit.
  
• Down force slope: use linear regression to capture the slope of short term price. If the short term price slope is sharp, it tends to stabilize then revert back.
  

🔵 HOW TO USE

• Use “Long” triangle shaped signal as entry signals
  

• Trade only the US500 or E-mini S&P 500 futures chart, because:
  

• 1. The ichimoku cloud will capture more prices as those instruments have extended hours session. That additional price will provide more confidence than just purely use SPX or SPY
  
• 2. This is a short term reversal signal. Although it sometimes capture large upside move, the goal is to find short term bottom and target for 20-30 points.
  

• Always use a stop loss: in some market conditions, the price move is more emotional than technical. Using a stop as always so that in those situations a massive loss won’t occur. From backtest a 20-30 points of stop loss is highly recommended.
  

• Be cautious when price is falling sharply because of some external events like FOMC, CPI, PCE or Non-Farm Payroll reports. Those times the indicator is less reliable.
  

• Wait until the candle closes: sometimes when market moves fast, the signal appears before candle close. Sometimes it’s a false signal and during that period, price will drop further. However, if wait until the candle closes, the signal is much more reliable. Below is a snapshot of sharp down move that false signal appeared in the middle of the drop before candle closes. Always wait until the candle closes to enter the trade.
  

Another example is similar sharp decline but with confirmed signal. That is a more reliable signal for a 1% move upside on the futures later.

• Be cautious to trade the signal in light volume sessions: when volume is light, the signal is less reliable and the upside maybe limited drastically. The best use of the indicator is during regular market sessions. Below is 6/19/2025, where the NYSE is closed, so futures are trading on lighter volume. Although the indicator captured most of the short term bounces, the price kept making new lows before reverting back upside when the 6/19 afternoon session re-opened.
  

• Linear regression setting: Currently the default is the last 120 period. If trader wants to capture even shorter look back period, adjust the period to 60 or 30. That will capture even shorter term down slope, but may increase the risk of being too sensitive. From my backtest, 120 period works the best.
  

🔵 CONCLUSION
K.T Bottom Snipper helps traders to visualizes how E-mini S&P future price move in very short term and captures short term relative bottom before price starts to revert back. It’s a confluence and powerful tool that attributed from multiple concepts and signals stated in the OVERVIEW. It’s ideal for day traders or short term reversal traders to scalp for quick profits.