Price Action Signals Filtered +EMA

The Price Action Signals Filtered +EMA indicator identifies potential trend reversals and continuations by combining pivot point detection with price action confirmation and a trend filter. It is designed to reduce market noise by ensuring that signals only trigger when price momentum aligns with the broader market trend defined by an Exponential Moving Average (EMA).

Usage

The tool can be used to identify high-probability entry points by looking for bullish or bearish shapes plotted on the chart.

• Bullish Signals: These appear below the price bar when a pivot low is confirmed by a specific number of consecutive higher closes, provided the current price is above the EMA.
• Bearish Signals: These appear above the price bar when a pivot high is confirmed by a specific number of consecutive lower closes, provided the current price is below the EMA.

The indicator uses the barstate.isconfirmed property to ensure signals only appear once a candle has closed, preventing repainting of the filtered signals.

Details

The script functions through a three-step validation process:

1. Pivot Detection: It identifies local highs and lows based on a user-defined lookback and lookforward period (Pivot Left/Right).
2. Price Action Confirmation: Once a pivot is found, the script checks the subsequent "N" candles. For a bullish signal, it requires each candle to close higher than the previous one. For a bearish signal, it requires each candle to close lower than the previous one.
3. Trend Filtering: The script calculates an EMA. Signals are only valid if they align with the trend: bullish signals must occur above the EMA, and bearish signals must occur below it.

Settings

Main Settings

• Pivot Left: Sets the number of bars required to the left to detect a pivot point.
• Pivot Right: Sets the number of bars required to the right to detect a pivot point.
• Number of Confirmation Candles: Determines how many consecutive candles must follow the price action rules (higher or lower closes) to confirm the pivot.
• EMA Length (Trend Filter): Defines the period for the Exponential Moving Average used to determine the primary trend direction.

Visual Settings

• Bullish/Bearish Signal Color: Customizes the color of the signal shapes.
• Bullish/Bearish Shape: Allows users to choose between Circle, Triangle, or Arrow shapes for signals.

FAQ

How do I use the Price Action Signals Filtered +EMA?

You can look for the plotted shapes on your chart which indicate that a price action pivot has been confirmed and is trending in alignment with the EMA.

What does the confirmation candle setting do?

It dictates the strictness of the price action filter. A higher number requires a more sustained move in the direction of the signal before the indicator plots a shape.

Where can I find more tools like this?

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