Triangle Reversal Indicator

The Triangle Reversal Indicator tool identifies potential price reversal points by detecting specific two-candle patterns where the current candle breaches the previous candle's extremes before closing in the opposite direction.

Usage

The indicator can be used to spot short-term exhaustion or reversal points in the market. It plots small triangles above or below candles when specific price action criteria are met, and it can also recolor the bars to highlight these signals.

• Bullish Reversal: A green triangle appears below the candle when the current candle makes a lower low than the previous candle but manages to close above the previous candle's close.
• Bearish Reversal: A red triangle appears above the candle when the current candle makes a higher high than the previous candle but manages to close below the previous candle's close.

These signals are often used as visual cues for potential entry or exit points within a broader trend or at key support and resistance levels.

Details

The script evaluates price action on a bar-by-bar basis. The core logic relies on the concept of a "liquidity grab" or a "fakeout," where price moves beyond a previous high or low to trigger stops or entice breakout traders, only to reverse and close back within the previous candle's range. This behavior suggests a shift in momentum. The script ensures signals are only processed once a bar is confirmed to prevent repainting.

Settings

• Show Triangles: Toggles the visibility of the triangle shapes on the chart.
• Bullish Candle Color: Sets the color for the bar when a bullish reversal condition is met.
• Bearish Candle Color: Sets the color for the bar when a bearish reversal condition is met.

FAQ

How do I use the signals for trading?

The triangles indicate potential reversals. Traders often look for these signals at established support or resistance levels to increase the probability of a successful trade.

Can I set up alerts for these signals?

Yes, the script includes built-in alert conditions for bullish, bearish, or any reversal signal, which can be configured through the TradingView alerts menu.

How can I access the Triangle Reversal Indicator?

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