Double Top/Bottom - Ultimate (OS)

The Double Top/Bottom - Ultimate (OS) indicator identifies and confirms classic M-shaped (Double Top) and W-shaped (Double Bottom) reversal patterns using ZigZag-based price action. It provides automated recognition, confirmation levels, and statistical tracking to help traders evaluate the reliability of these chart patterns across different market conditions.

Usage

The indicator detects patterns based on specific ZigZag pivot relationships and then monitors for breakout confirmation or pattern invalidation.

Double Top Recognition (M-Pattern)

• Recognition: Identified when the ZigZag detects a Lower High (LH) followed by a Higher High (HH).
• Confirmation: Occurs when the price crosses under the last lower pivot point (the "neckline") of the ZigZag.
• Invalidation: Occurs if the price crosses over the Higher High before confirmation.

Double Bottom Recognition (W-Pattern)

• Recognition: Identified when the ZigZag detects a Higher Low (HL) followed by a Lower Low (LL).
• Confirmation: Occurs when the price crosses over the last higher pivot point of the ZigZag.
• Invalidation: Occurs if the price crosses under the Lower Low before confirmation.

Risk per Reward (RR) Metric

The indicator calculates a "Risk per Reward" ratio based on the steepness of the W/M triangle. This is the ratio of the price difference between the midpoint and the extreme points.

• Double Top: Downside is considered reward; upside is risk.
• Double Bottom: Upside is considered reward; downside is risk.
• Interpretation: A lower Risk per Reward value typically signifies a more favorable technical setup.

Details

The script utilizes a ZigZag algorithm to filter out market noise and focus on significant structural pivots. Patterns are only valid if they meet the user-defined Max Risk Per Reward threshold, ensuring that "shallow" or "overextended" patterns are filtered out.

The tool also features a persistent statistics display. It tracks the total occurrences of patterns and the frequency of successful confirmations versus invalidations. These stats are color-coded:

• Green: High confirmation rates.
• Orange: Low confirmation rates.
• Yellow: Neutral or balanced rates.

Settings

General Settings

• Length: Adjusts the sensitivity of the ZigZag pivot detection.
• Show Zigzag: Toggles the visibility of the underlying ZigZag lines.
• Show Pivots: Displays the High/Low pivot labels.
• Show Stats: Enables or disables the statistical performance dashboard.

Visuals

• Bullish/Bearish Colors: Customizes the colors for Double Bottom and Double Top patterns.
• Bull/Bear Trap Colors: Sets colors for failed pattern breakouts.
• Max Risk Per Reward: Filters patterns based on the ratio of the pattern's height to its midpoint.
• Display Risk Per Reward: Toggles the RR value label on the chart.

FAQ

How do I interpret the dashed lines?

The dashed lines represent the confirmation (neckline) and invalidation (extreme high/low) levels for the most recently detected pattern.

Why did a pattern disappear?

Patterns may be recalculated or removed if the underlying ZigZag pivots shift due to new price extremes, or if the pattern exceeds the maximum Risk per Reward setting.

How can I access this indicator?

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