Cyclic Reversal Engine

The Cyclic Reversal Engine indicator utilizes adaptive cycle analysis and market regime detection to identify potential trend exhaustion points and high-probability reversal signals.

Usage

The Cyclic Reversal Engine can be used to time market turns by monitoring the relationship between price action and time-based cycles. The tool provides visual signals on the chart and real-time data via a dashboard.

• Dashboard Monitoring: The bottom-right panel displays the current market regime (Trending, Ranging, or Reversal) and the "Adaptive Cycle / Bar Count." When the current bar count approaches or exceeds the adaptive cycle target, the background highlights, indicating a reversal is "due."
• Buy/Sell Signals: Labels are generated when the timing condition (cycle length met) aligns with price confirmation. A BUY signal indicates the completion of a downside cycle, while a SELL signal indicates the completion of an upside cycle.
• Signal Customization: Users can switch between "Normal" and "Minimal" signal styles depending on their visual preference and chart clarity needs.

Details

Unlike standard oscillators that focus solely on momentum, this tool incorporates a temporal dimension. It functions through a multi-stage logic:

1. Market Regime Analysis: It diagnoses the current market environment using ADX, Choppiness Index, and RSI to determine if the market is trending, ranging, or in an over-extended reversal state.
2. Adaptive Cycle Learning: The script measures the duration (in bars) between significant swing points and stores these values in memory. It calculates a running average cycle length specifically for each regime, allowing it to adapt as market speed changes.
3. Timing & Trigger: A countdown begins from the last major swing point. Once the bar count reaches the regime-specific average, the engine waits for a momentum trigger (RSI extreme) before issuing a final signal.

Settings

1. Cycle Analysis Engine

• Pivot Lookback: Adjusts the sensitivity for detecting swing highs and lows. Smaller values detect shorter cycles; larger values focus on major market swings.
• Cycles to Store in Memory: Determines the number of past cycles used to calculate the adaptive average for each regime.

2. Market Regime Engine

• ADX Length/Threshold: Configures the Average Directional Index to define when the market is considered "Trending."
• Choppiness Length/Threshold: Configures the Choppiness Index to define when the market is "Ranging."
• RSI Length/Extreme Levels: Sets the boundaries for the "Reversal" regime and the momentum exhaustion confirmation.

3. Signal Confirmation

• Require Price Confirmation: When enabled, signals only trigger if the timing condition is met AND the RSI is in an extreme overbought or oversold zone.

FAQ

How do I interpret the "Adaptive Cycle / Bar Count" on the dashboard?

The first number is the average historical cycle length for the current market regime, and the second number is how many bars have passed since the last significant peak or trough. If the second number is higher than the first, a reversal is statistically likely to occur soon.

Can I use this for scalping or long-term trading?

Yes, by adjusting the "Pivot Lookback" and the chart timeframe, the engine adapts its cycle calculations to suit different trading styles, from fast-paced scalping to long-term swing trading.

How can I access the Cyclic Reversal Engine?

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