Fibonacci Timing Pattern II

The Fibonacci Timing Pattern II indicator is a price-based counter that identifies medium-term market reversals by analyzing relative close price positions across the Fibonacci sequence.

Usage

The Fibonacci Timing Pattern II is primarily used to identify exhaustion points in price action. Traders can use the triangle shapes plotted on the chart to identify potential entries:

• Bullish Signal (Green Triangle): Plotted below the bar when the script detects a sequence of lower closes corresponding to Fibonacci lookback periods, followed by a pivot at the 34 and 55-period mark.
• Bearish Signal (Red Triangle): Plotted above the bar when the script detects a sequence of higher closes corresponding to Fibonacci lookback periods, followed by a pivot at the 34 and 55-period mark.

These signals are most effective when applied to sideways (ranging) markets or when used as continuation signals within an established trend. For example, in an uptrend, a bullish signal may indicate the end of a corrective pullback.

Details

The script evaluates price momentum by comparing the current close to previous closes at specific intervals derived from the Fibonacci sequence: 1, 2, 3, 5, 8, 13, 21, 34, and 55.

The logic requires a specific "staircase" effect in price. For a bullish setup, the price must consistently close lower at each Fibonacci interval until reaching the 34th period, which must then be higher than the 55th period close. This specific structure aims to capture a deceleration in momentum that often precedes a reversal. The script includes logic to prevent consecutive signals, ensuring that only the initial trigger of a pattern is highlighted.

Settings

This script is a pure price-action calculation and does not feature external input parameters. The logic is hardcoded to the Fibonacci sequence:

• Fibonacci Intervals: The script automatically checks lookback periods of 1, 2, 3, 5, 8, 13, 21, 34, and 55.
• Visuals: Triangle shapes are automatically plotted upon signal detection.

FAQ

How do I interpret the signals?

A green triangle below a bar indicates a potential bullish reversal, while a red triangle above a bar indicates a potential bearish reversal.

What market conditions are best for this indicator?

While it can work in various conditions, it is best suited for mean-reversion strategies in ranging markets or as a timing tool for pullbacks in trending markets.

How can I access this tool?

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