Outside Reversal SetUp

The Outside Reversal SetUp indicator identifies specific price action patterns based on Frank Ochoa's "Secrets of a Pivot Boss," designed to highlight potential trend reversals after a failed breakout.

Usage

The Outside Reversal SetUp can be used to identify points where market participants have unsuccessfully tested liquidity beyond previous highs or lows.

• Long Setup (BUY): Occurs when a candle's low is lower than the previous bar's low, but the close finishes above the previous bar's high. This suggests that sellers failed to maintain control, leading to a sharp bullish reversal.
• Short Setup (SELL): Occurs when a candle's high is higher than the previous bar's high, but the close finishes below the previous bar's low. This indicates that buyers were unable to sustain a breakout, resulting in a bearish reversal.

Traders often use these signals in conjunction with Pivot Points or other support and resistance levels to confirm high-probability reversal zones.

Details

The power behind this pattern lies in the psychology of "trapped" traders. When price extends past a range (resistance or support) and fails to find new business, responsive participants quickly drive price back toward the previous value area. This indicator automates the detection of these specific price action conditions:

• Bullish condition: low < low[1] and close > high[1] and open < close[1]
• Bearish condition: high > high[1] and close < low[1] and open > open[1]

Settings

• ReversalLong: Toggles the visibility of the "BUY" arrow shape and color properties for bullish reversals.
• ReversalShort: Toggles the visibility of the "SELL" arrow shape and color properties for bearish reversals.

FAQ

How do I use the Outside Reversal SetUp?

You can look for these signals at key technical levels like Pivot Points or historical Support/Resistance to confirm a potential change in trend direction.

What do the background colors signify?

A green background highlight indicates a completed Bullish Outside Reversal, while a red background highlight indicates a completed Bearish Outside Reversal.

How can I access this indicator?

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