Pivot Reversal Strategy + RSI

The Pivot Reversal Strategy + RSI tool provides a systematic approach to identifying market reversals by combining pivot point detection with RSI filtering to identify high-probability entry points. It aims to filter out false breakouts by ensuring trade signals only occur when price action and momentum are in alignment.

Usage

The indicator identifies potential reversal points using pivot highs and lows. A bullish signal is generated when the price crosses above a recent pivot high, provided the RSI is below the overbought threshold. Conversely, a bearish signal is triggered when the price crosses below a recent pivot low, provided the RSI is above the oversold threshold.

Users can employ this script to:

• Identify significant structural pivot points on the chart.
• Filter breakout signals based on Relative Strength Index (RSI) levels to avoid entering trades in overextended conditions.
• Set up automated alerts for both buy and sell conditions.

Details

The script tracks the most recent pivot high and low prices. These levels act as dynamic thresholds. A "Buy" signal occurs when the current bar's high exceeds the last established pivot high (plus a minimum tick offset) while the RSI remains below the user-defined overbought level. A "Sell" signal occurs when the current bar's low drops below the last established pivot low (minus a minimum tick offset) while the RSI remains above the user-defined oversold level.

Settings

• Left Bars: The number of bars to the left required to confirm a pivot point.
• Right Bars: The number of bars to the right required to confirm a pivot point.
• RSI - Overbought Level: The threshold for the RSI; buy signals are only permitted if the RSI is below this value.
• RSI - Oversold Level: The threshold for the RSI; sell signals are only permitted if the RSI is above this value.

FAQ

How do I access Pivot Reversal Strategy + RSI?

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

Can I adjust the sensitivity of the reversals?

Yes, by modifying the "Left Bars" and "Right Bars" settings, you can determine how significant a price peak or valley must be to be considered a pivot.

What is the purpose of the RSI filter in this script?

The RSI filter prevents the indicator from signaling a "Buy" when the market is already potentially overbought or a "Sell" when it is oversold, helping to improve the quality of the reversal signals.