Impulse Waves & Reversal Zones

The Impulse Waves & Reversal Zones indicator provides a structural overlay that classifies price action into impulse and correction legs to project high-probability zones where the dominant trend is expected to resume. This tool automates the identification of qualified market structure, framing pullbacks with managed reversal zones, targets, and live status tracking to filter noise and highlight valid trend-continuation opportunities.

Usage

The Usage section describes how the script can be used to map market structure and identify potential reversal areas.

• Identifying Market Structure: The indicator draws bold green (bullish) or coral (bearish) trend channels over legs that meet specific efficiency and displacement criteria. Weaker legs are represented by a faint "wave skeleton," allowing you to distinguish between significant market moves and minor fluctuations.
• Correction Monitoring: Active pullbacks are highlighted with amber dashed boxes. These boxes include a label showing the retracement depth relative to the preceding impulse. If a retracement exceeds 100%, it is flagged as a "deep retrace," signaling a potential structural shift.
• Reversal Zone Execution: When a qualified impulse is detected, a reversal zone is automatically projected between the 0.382 and 0.618 Fibonacci levels. The script calculates specific targets (TP1 at 1.272 and TP2 at 1.618) and a stop-loss level, providing a complete framework for analyzing potential setups.
• Multi-Timeframe Analysis: A compact panel on the right side of the chart provides a higher-timeframe (HTF) bias and trend-conviction score. Users can use this to ensure local setups align with the broader market direction. The "ALIGN" score indicates how many higher timeframes agree with the current chart's bias.

Details

The indicator utilizes a "Protected-Swing" state machine to track trend direction. Unlike standard zigzag tools that flip bias on any minor break, this script only flips the trend when price breaks the specific swing high or low that launched the prior impulse.

Every price leg is evaluated using a Self-Calibrating Impulse Quality Score (0-100):

1. Efficiency Ratio: Measures how straight the leg is (net move vs. path traveled).
2. Displacement Percentile: Ranks the leg's size in ATR units against recent market moves.

A leg only qualifies as an "Impulse" if it is with-trend and exceeds the user-defined strength threshold. This ensures that the reversal zones are only anchored to significant price action. The live status chip tracks the setup through four states: Wait, In-Zone, Target Hit, and Stopped. Once a setup is resolved, the zone is greyed out to prevent "phantom" signals from lingering on the chart.

Settings

Adaptive Impulse Engine

• ATR Length: Sets the lookback period for ATR calculations used in filtering and stop placement.
• Swing Filter (ATR): The primary sensitivity toggle; higher values result in fewer, larger swings.
• Pivot Left/Right Bars: Determines the number of bars required to confirm a pivot point (Right Bars sets the confirmation delay).
• Impulse Strength Min: The minimum score (0-100) required for a leg to be classified as a qualified impulse.
• Channel Width (ATR): Controls the visual width of the trend channels.

Visuals

• Impulse Up/Down/Correction/Zone Colors: Customizable colors for various structural elements.
• Visibility Toggles: Independent switches for the Wave Skeleton, Entry Zone, Targets, and Labels.

Multi-Timeframe HUD

• Show HUD: Toggles the information panel.
• Auto: 3 higher TFs: When enabled, the panel automatically selects the next standard timeframes (e.g., 1H chart shows 4H, 1D, 1W).
• Manual Timeframes: Allows users to pin specific timeframes for the HUD.
• Position: Moves the panel to any of the four corners of the chart.

FAQ

How does the indicator handle repainting?
The indicator uses confirmed pivots (based on the "Right Bars" setting). While the "forming" leg updates in real-time, once a pivot is confirmed, the historical impulses and reversal zones remain fixed and do not repaint.

Why are some setups greyed out?
The script uses a latched state system. Once price hits a target or a stop, the setup is considered resolved and is greyed out to indicate it is no longer an active opportunity.

How do I access the Impulse Waves & Reversal Zones indicator?
You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.