Wick Reversal Indicator - Aligned with "Secrets of a Pivot Boss"

The Wick Reversal Indicator is a technical analysis tool that identifies potential market reversal points by evaluating candlestick geometry based on the principles outlined in Franklin O. Ochoa, Jr.'s "Secrets of a Pivot Boss". It provides automated signals when specific ratios between wick length and body size are met, indicating a potential exhaustion of the current trend.

Usage

The Wick Reversal Indicator is used to spot high-probability turning points where price action suggests a rejection of higher or lower levels. The indicator plots triangular markers on the chart to signal these shifts:

• Bullish Wick Reversal: Represented by a green upward triangle below the bar. This occurs when a candle exhibits a long lower wick (rejection of lower prices) and a relatively small body near the top of the candle range.
• Bearish Wick Reversal: Represented by a red downward triangle above the bar. This occurs when a candle exhibits a long upper wick (rejection of higher prices) and a relatively small body near the bottom of the candle range.

Traders typically use these signals in conjunction with key support and resistance levels, pivot points, or moving averages to confirm entries.

Details

The script follows the specific pseudocode logic from "Secrets of a Pivot Boss." It evaluates the relationship between the candle's open, high, low, and close to determine if a "wick reversal" has occurred.

The logic primarily focuses on:

1. Wick Dominance: Ensuring the wick is significantly larger than the candle body based on the user-defined multiplier.
2. Body Positioning: Checking that the candle body is positioned at one extreme of the total range (top 25% for bullish, bottom 25% for bearish by default).
3. Volatility Filter: For specific "Doji" style reversals (where open equals close), the script compares the total candle range against a 50-period Simple Moving Average (SMA) of the range to ensure the signal has sufficient volatility to be meaningful.

Settings

• Wick Multiplier: Adjusts how many times larger the wick must be compared to the body. Increasing this value makes the indicator more selective.
• Body Percentage: Defines the maximum allowable ratio of the body relative to the total candle range. Lowering this value requires a "tighter" candle body for a signal to trigger.

FAQ

How do I access the Wick Reversal Indicator?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.

What book is this indicator based on?

This indicator is based on the technical methodologies and pseudocode provided in "Secrets of a Pivot Boss" by Franklin O. Ochoa, Jr.

Can I use this for intraday trading?

Yes, the logic is designed to be fractal and can be applied to various timeframes, though it is often used on intraday charts alongside pivot point analysis as described in the source material.