PROTECTED SOURCE SCRIPT
Updated The Reality Check Indicator with Vector Candles
Welcome to "The Reality Check Indicator" (TRC), a comprehensive and customizable tool designed for traders who seek a deeper understanding of market dynamics. Our indicator combines the precision of Exponential Moving Averages (EMAs) with the insightful PVSRA methodology, offering a unique perspective on price action.
What Is Price Action Trading?
Price action trading is a methodology used by traders to analyze and make trading decisions based solely on the price movements of an asset, without relying on indicators or other external factors. It involves interpreting the raw price data presented on a chart, such as candlestick patterns, support and resistance levels, and chart patterns, to identify potential trading opportunities. Here's an overview of the key principles and methodology behind price action trading:
1. Candlestick Analysis:
Price action traders focus on reading and interpreting candlestick patterns to understand market sentiment and direction. Common candlestick patterns include:
Engulfing patterns: Where one candlestick's body completely engulfs the previous candlestick's body, indicating a potential reversal.
Pin bars: Candlesticks with a small body and a long wick, suggesting a rejection of higher or lower prices.
Inside bars: Where the high and low of a candlestick are within the range of the previous candlestick, signaling consolidation or potential breakout.
2. Support and Resistance Levels:
Price action traders identify key support and resistance levels based on historical price data, where the price has previously reacted or reversed. These levels act as barriers that the price may struggle to break through and often provide potential entry and exit points for trades.
3. Trend Analysis:
Price action traders analyze the overall trend of the market to determine the direction of their trades. They may use simple tools like trendlines or moving averages to identify the prevailing trend and look for trading opportunities in the direction of the trend.
4. Chart Patterns:
Price action traders pay attention to chart patterns, such as triangles, flags, and head and shoulders patterns, which can provide insights into potential price movements. These patterns often indicate consolidation, continuation, or reversal of trends.
5. Market Structure:
Traders analyze the structure of the market, including swing highs and lows, to identify potential turning points or areas of interest for trading. Understanding market structure helps traders gauge the strength of trends and anticipate potential reversals.
6. Price Action Signals:
Price action traders rely on specific price action signals to enter and exit trades. These signals may include bullish or bearish candlestick patterns, breakouts from key levels, or rejections at support or resistance levels.
7. Risk Management:
Risk management is a crucial aspect of price action trading. Traders use stop loss orders to limit potential losses and position sizing to manage risk effectively. They may also adjust their risk-reward ratios based on the volatility and structure of the market.
Overall, price action trading emphasizes simplicity, focusing on the most relevant information presented by price movements themselves. By understanding and interpreting price action signals, traders aim to identify high-probability trading opportunities while minimizing reliance on lagging indicators or external data sources.
TRC Premise
Entry Designed
Use your own Strategy as a Filter, The TRC merely Acts as an Entry Signal for your Strategy
This Indicator is Complimentary Only:
IF you use ICT/SMC/ Support/Resistance / Mean Reversion or any other Strategy, use that strategy first, then use this indicator as an Entry signal to confirm your strategies’ Entry Point.
Bullish TRC Criteria:
Catching a Bullish Engulfing Before the Engulfment happens:
When a Bearish Candle Breaks the lows, And Turns Bullish, And closes inside Previous Bullish Candle
For a Bullish TRC, the Prior Candle has to be Bearish.
Bearish TRC Criteria:
Catching a Bearish Engulfment Before it happens:
When a Bullish Candle Breaks the Highs, And Turns Bearish. And closes inside Previous Bearish Candle
For a Bearish TRC, the Prior Candle has to be Bullish.
The Concept:
Consider it an “Outside>Inside Bar”
It transitions through Price Action from going (Outside) into the Lows, breaking the local(Nearby) lows (Bearish), then transitioning into the (Inside) Starting the Bullish Engulfing.
The Candle Takes Liquidity (Think of say a Liquidity sweep/Stop hunt)(Outside), then “Flips” Essentially What Happens is: There was enough thrust/momentum/Price/Pressure whatever you want to call it, to push price to Break the high(Potentially Bearish), or low (Potentially Bullish), Sweep/Stop Hunt the liquidity, then “Flips” And Closes inside the previous Candle. So you don’t have such a large candle that “Flipped”, so consider it an Early Warning sign of a Bullish/Bearish Engulfing.
The Benefit:
Bullish and Bearish engulfing candles are a common Price action candlestick pattern, this gives you more of an early warning sign of an impending bullish/bearish engulfing before it actually happens and is confirmed for additional potential profits of the move.
Essentially:
You get more “Meat” of the move, rather than catching it later.
The Summary:
Bullish TRC:
Candle Starts out Bearish
Candle Breaks Local Lows (Goes Outside)
Gains Steam in the opposite direction (Turns Bullish)
The “Flip” Happens
Goes back (Inside) The previous Candle
You (Based on your existing strategy as a filter) See the Entry highlighted
(Green Triangle for long)
You expect after the Bullish Engulfing a Continuation of the move
Keep in mind it’s not always the case, just probability
Bearish TRC:
Candle Starts out Bullish
Candle Breaks Local Highs (Goes Outside)
Gains Steam in the opposite direction (Turns Bearish)
The “Flip” Happens
Goes back (Inside) The previous Candle
You (Based on your existing strategy as a filter) See the Entry highlighted
Red Triangle for Short)
You expect after the Bearish Engulfing a Continuation of the move
Keep in mind it’s not always the case, just probability
What Is Price Action Trading?
Price action trading is a methodology used by traders to analyze and make trading decisions based solely on the price movements of an asset, without relying on indicators or other external factors. It involves interpreting the raw price data presented on a chart, such as candlestick patterns, support and resistance levels, and chart patterns, to identify potential trading opportunities. Here's an overview of the key principles and methodology behind price action trading:
1. Candlestick Analysis:
Price action traders focus on reading and interpreting candlestick patterns to understand market sentiment and direction. Common candlestick patterns include:
Engulfing patterns: Where one candlestick's body completely engulfs the previous candlestick's body, indicating a potential reversal.
Pin bars: Candlesticks with a small body and a long wick, suggesting a rejection of higher or lower prices.
Inside bars: Where the high and low of a candlestick are within the range of the previous candlestick, signaling consolidation or potential breakout.
2. Support and Resistance Levels:
Price action traders identify key support and resistance levels based on historical price data, where the price has previously reacted or reversed. These levels act as barriers that the price may struggle to break through and often provide potential entry and exit points for trades.
3. Trend Analysis:
Price action traders analyze the overall trend of the market to determine the direction of their trades. They may use simple tools like trendlines or moving averages to identify the prevailing trend and look for trading opportunities in the direction of the trend.
4. Chart Patterns:
Price action traders pay attention to chart patterns, such as triangles, flags, and head and shoulders patterns, which can provide insights into potential price movements. These patterns often indicate consolidation, continuation, or reversal of trends.
5. Market Structure:
Traders analyze the structure of the market, including swing highs and lows, to identify potential turning points or areas of interest for trading. Understanding market structure helps traders gauge the strength of trends and anticipate potential reversals.
6. Price Action Signals:
Price action traders rely on specific price action signals to enter and exit trades. These signals may include bullish or bearish candlestick patterns, breakouts from key levels, or rejections at support or resistance levels.
7. Risk Management:
Risk management is a crucial aspect of price action trading. Traders use stop loss orders to limit potential losses and position sizing to manage risk effectively. They may also adjust their risk-reward ratios based on the volatility and structure of the market.
Overall, price action trading emphasizes simplicity, focusing on the most relevant information presented by price movements themselves. By understanding and interpreting price action signals, traders aim to identify high-probability trading opportunities while minimizing reliance on lagging indicators or external data sources.
TRC Premise
Entry Designed
Use your own Strategy as a Filter, The TRC merely Acts as an Entry Signal for your Strategy
This Indicator is Complimentary Only:
IF you use ICT/SMC/ Support/Resistance / Mean Reversion or any other Strategy, use that strategy first, then use this indicator as an Entry signal to confirm your strategies’ Entry Point.
Bullish TRC Criteria:
Catching a Bullish Engulfing Before the Engulfment happens:
When a Bearish Candle Breaks the lows, And Turns Bullish, And closes inside Previous Bullish Candle
For a Bullish TRC, the Prior Candle has to be Bearish.
Bearish TRC Criteria:
Catching a Bearish Engulfment Before it happens:
When a Bullish Candle Breaks the Highs, And Turns Bearish. And closes inside Previous Bearish Candle
For a Bearish TRC, the Prior Candle has to be Bullish.
The Concept:
Consider it an “Outside>Inside Bar”
It transitions through Price Action from going (Outside) into the Lows, breaking the local(Nearby) lows (Bearish), then transitioning into the (Inside) Starting the Bullish Engulfing.
The Candle Takes Liquidity (Think of say a Liquidity sweep/Stop hunt)(Outside), then “Flips” Essentially What Happens is: There was enough thrust/momentum/Price/Pressure whatever you want to call it, to push price to Break the high(Potentially Bearish), or low (Potentially Bullish), Sweep/Stop Hunt the liquidity, then “Flips” And Closes inside the previous Candle. So you don’t have such a large candle that “Flipped”, so consider it an Early Warning sign of a Bullish/Bearish Engulfing.
The Benefit:
Bullish and Bearish engulfing candles are a common Price action candlestick pattern, this gives you more of an early warning sign of an impending bullish/bearish engulfing before it actually happens and is confirmed for additional potential profits of the move.
Essentially:
You get more “Meat” of the move, rather than catching it later.
The Summary:
Bullish TRC:
Candle Starts out Bearish
Candle Breaks Local Lows (Goes Outside)
Gains Steam in the opposite direction (Turns Bullish)
The “Flip” Happens
Goes back (Inside) The previous Candle
You (Based on your existing strategy as a filter) See the Entry highlighted
(Green Triangle for long)
You expect after the Bullish Engulfing a Continuation of the move
Keep in mind it’s not always the case, just probability
Bearish TRC:
Candle Starts out Bullish
Candle Breaks Local Highs (Goes Outside)
Gains Steam in the opposite direction (Turns Bearish)
The “Flip” Happens
Goes back (Inside) The previous Candle
You (Based on your existing strategy as a filter) See the Entry highlighted
Red Triangle for Short)
You expect after the Bearish Engulfing a Continuation of the move
Keep in mind it’s not always the case, just probability
Release Notes
We fixed the Alerts not working and added some additional Alert options.Protected script
This script is published as closed-source. However, you can use it freely and without any limitations – learn more here.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Protected script
This script is published as closed-source. However, you can use it freely and without any limitations – learn more here.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.