The Strong Pullback Indicator is designed to identify potential pullbacks or even trend reversals by utilizing a specific candlestick pattern in conjunction with the Relative Strength Index (RSI). It is advised to employ this indicator in chart intervals of 15 minutes or higher, as intervals below 15 minutes may generate excessive false signals.
Upon detecting the designated candlestick pattern, the indicator examines whether any of the last five candles exhibit RSI values below 30 or above 70 across at least four distinct time intervals, depending on whether the pattern is bullish or bearish. The RSI calculations incorporate eight different intervals: 1 minute (1m), 5 minutes (5m), 15 minutes (15m), 30 minutes (30m), 1 hour (1h), 2 hours (2h), 4 hours (4h), and 1 day (1d). An arrow is rendered above or below the current candle only when these conditions are met.
Users have the option to adjust the number of overbought or oversold intervals, as well as the general settings for the RSI.
The indicator can also serve as a trade signal to initiate trades in the opposite direction. To evaluate the potential success of a trade in a backtesting scenario, SL (Stop Loss) and TP (Take Profit) lines can be displayed on the chart. The SL is calculated by taking the distance from the close of the current candle to the high/low of the previous candle and multiplying it by 2.
In the settings, you can alter the Risk Reward Ratio (RRR) of the trade. Given the pullback nature of this indicator, a RRR of 1:1 is deemed logical, thus set as the default value.
Bullish vs. Bearish Candle Counter:
An additional feature of this indicator is its ability to analyze the last 100 candles to ascertain the ratio of bullish to bearish candles. When a 60% threshold is reached, the chart background color alters accordingly. This feature was conceived after a thorough analysis of over 50,000 candles of a currency pair revealed nearly identical counts of bullish and bearish candles, suggesting a market tendency to maintain this balance.
Within the settings, you have the flexibility to modify the number of candles to be analyzed and the percentage threshold for each candle type.
Should you have any ideas on how to enhance the accuracy of this indicator, or suggestions for other indicators that could improve the signals, feel free to leave a comment.
Here's how to set up an alert:
1. Navigate to the chart where your indicator is applied.
2. Click on the bell icon located in the upper right corner of the user interface to open the alert window.
3. Click on the "Create Alert" button.
4. In the "Condition" dropdown menu, select your indicator. The custom alert conditions you defined in the code (such as "Top Fractal Alert" and "Bottom Fractal Alert") should now be available as options.
5. Select the desired alert condition and configure the other alert settings to your liking (e.g., how you want the alert to notify you).
6. Click on "Create" to create the alert.
Additionally, I want to point out that the "Bullish vs. Bearish Candle Counter" can also be applied in the 1-minute chart and is not affected by the 15-minute recommendation made earlier in my description.
LABEL SETTINGS: To differentiate between the marked patterns, you can opt to display labeled labels instead of arrows.
RSI: You have the option to mark the candles in the chart that meet the Overbought/Oversold conditions you have set.
BULLISH VS. BEARISH CANDLE COUNTER: The ability to disable this function has been added in this update.
In true TradingView spirit, the author of this script has published it open-source, so traders can understand and verify it. Cheers to the author! You may use it for free, but reuse of this code in a publication is governed by House Rules. You can favorite it to use it on a chart.