PIVOT WICK REVERSAL SETUP

The PIVOT WICK REVERSAL SETUP indicator identifies potential trend exhaustion and reversal points by analyzing candle wick proportions relative to body size and closing price position. It highlights specific price action patterns where long wicks suggest a rejection of higher or lower prices, providing visual cues for market reversals.

Usage

The Usage section focuses on identifying price rejection candles that often precede a change in market direction.

• Bullish Reversal: A bullish signal (upward triangle) appears when a candle exhibits a significant lower wick compared to its body and the closing price is within the upper portion of the candle's range. This suggests that sellers pushed the price down, but buyers stepped in to push it back up before the close.
• Bearish Reversal: A bearish signal (downward triangle) occurs when there is a significant upper wick relative to the body and the close is within the lower portion of the range. This indicates that buyers attempted to drive prices higher, but were met with strong selling pressure.

Details

The script executes logic based on the relationship between the candle's wicks, body, and total range. It uses a "Wick Multiplier" to ensure the rejection tail is substantially larger than the candle's body, filtering out indecisive price action. Additionally, a "Close Value Percent" threshold ensures the close occurs near the extreme opposite of the rejection wick, confirming that the counter-trend momentum was sustained through the end of the period.

Settings

• Wick Multiplier: Determines how many times larger the wick must be compared to the body for a signal to trigger. Increasing this value makes the signals more selective.
• Close Value Percent: Sets the threshold for where the candle must close relative to its range. For example, 0.35 means a bullish candle must close in the top 35% of its total range.

FAQ

How do I use the Pivot Wick Reversal Setup?

You can look for these signals at key support or resistance levels to confirm potential entries. A bullish signal at a support level or a bearish signal at a resistance level typically offers higher probability setups.

Can I adjust the sensitivity of the signals?

Yes, by modifying the "Wick Multiplier," you can require more "extreme" wicks to filter out noise, or lower it to capture more frequent reversal attempts.

Where can I access this tool?

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