cristian.d

Reversal Candle Pattern SetUp



An outside reversal candle set up script with buy/sell signals. Looks simple but it's pretty powerful especially if combined with your choice confirming indicator.

The pattern psychology is this one (Frank Ochoa explanation): "The power behind this pattern lies in the psychology behind the traders involved in this setup. If you have ever participated in a breakout at support or resistance only to have the market reverse sharply against you, then you are familiar with the market dynamics of this setup.

[Basically, market participants are testing the waters above resistance or below support to make sure there is no new business to be done at these levels. When no initiative buyers or sellers participate in range extension, responsive participants have all the information they need to reverse price back toward a new area of perceived value.
As you look at a bullish outside reversal pattern, you will notice that the current bar's low is lower than the
prior bar's low. Essentially, the market is testing the waters below recently established lows to see if a downside
follow-through will occur. When no additional selling pressure enters the market, the result is a flood of buying
pressure that causes a springboard effect, thereby shooting price above the prior bar's highs and creating the
beginning of a bullish advance."
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//  Created by Cristian.D - from Secrets of a Pivot Boss - Frank Ochoa
study(title="OutsideReversal", shorttitle="OReversal", overlay=true)


// 
ReversalLong = low < low[1] and close > high[1]  and open <close[1]
ReversalShort = high > high[1] and close < low[1] and open >open[1]



// Bar Colors and signals
plotshape(ReversalLong,  title= "ReversalLong", location=location.belowbar, color=lime, style=shape.arrowup, text="BUY")
plotshape(ReversalShort,  title= "ReversalShort", location=location.abovebar, color=red, style=shape.arrowdown, text="SELL")

bgcolor(ReversalLong ==1 ? lime : ReversalShort==1 ? red : na, transp=70)

Comments

If anyone wants to solve the lack of BUY signals then do this:
At the end of line 6 change "close" to "open".
So it looks like this: ReversalLong = low < low and close > high and open < open
+15 Reply
It's really good i got 10itm 1otm but i have a problem cause there is only sell signals on my chart
+6 Reply
sjcwealth batbayarbilguun3
@batbayarbilguun3 Well done! What is your time frame: 1 minute? 5 minutes? 15 minutes or 30 minutes?
+21 Reply
GHOP200 batbayarbilguun3
I have the same issue :(
+4 Reply
RenzoLuna batbayarbilguun3
Guys, did u manage to solve the issue with the "buy" signalss ?? If u did, i would appreciate it if u tell me how to solve it.
Thanks in advance.
+1 Reply
Hi cristian...this script is very nice but i can see only sell signals and not buy ones....why? thanks
+4 Reply
buy signal not show
+1 Reply
The solutions to this problem is to use with inputs lookback period: 1, Bar ATR multiplier: 0

Problem solved.
Reply
vipicorp LB-Trader
@LB-Trader, Hi when I apply this, it's coming OR instead of up/down symbol.
Reply
LB-Trader vipicorp
@vipicorp, Yes, OR = Outside Reversal, you can change the symbol to whatever you want from the dropdown meny in settings.
Reply
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