Trend Reversal System with SR levels

The Trend Reversal System with SR levels indicator is a comprehensive technical analysis tool designed to identify potential market exhaustion and trend reversals through a multi-phase sequential counting system combined with dynamic support and resistance levels. It provides traders with objective entry signals based on "Setup" and "Count" phases, helping to pinpoint high-probability turning points in any asset.

Usage

The indicator functions through two primary phases:

• Setup Phase: Tracks a sequence of price movements (typically 9 bars) where the close is compared to the close of four bars prior. When a setup is completed and "perfected" (meeting specific low/high requirements relative to recent bars), an 'S' label appears, signifying a potential reversal zone.
• Countdown Phase: Once a setup is complete, the tool begins a 13-bar countdown. If the countdown reaches 13, a 'C' label is plotted, indicating a more significant potential reversal point.
• SR Levels: The script automatically plots Support and Resistance lines based on the highs and lows established during completed Setup phases.
• Risk & Targets: When enabled, the tool identifies specific entry labels ("TRSSetup" or "TRSCount") and provides calculated risk levels (Stop Loss) and profit targets.

Details

The system utilizes a logic similar to sequential exhaustion indicators. A "Recycle" ('R') occurs if a new setup of the same direction appears that is more significant than the current one, effectively restarting the count. Conversely, a count can be "Cancelled" ('x') if price breaks the opposite SR level or a contrary setup occurs. The "Conservative" versus "Aggressive" approach settings determine the strictness of the entry conditions based on price action confirmation.

Settings

Visuals

• Show Support/Resistance: Toggles the visibility of horizontal SR levels derived from setup phases.
• Show Setup: Toggles the display of the 9-bar setup labels.
• Show Details (Setup/Counts): When enabled, shows the individual numbers (1-12) for each bar in the sequence; when disabled, only key milestone labels are shown.
• Show Risk Levels and Targets: Displays projected stop loss and take profit zones on the chart.
• Show Buy/Sell Labels: Toggles the specific "TRS" entry signal labels.

Logic

• Counts/Setup Entry Approach: Choose between "Conservative" (requires more confirmation) or "Aggressive" (faster entry) for the signal labels.
• Expectation %: Adjusts the percentage-based threshold for target calculations.

FAQ

• How do I interpret the 'S' and 'C' labels? 'S' stands for a completed Setup (9 bars), while 'C' stands for a completed Countdown (13 bars). Both indicate potential reversal points, with 'C' generally being considered a stronger exhaustion signal.
• What does the 'R' label mean? 'R' stands for Recycle. It means the current countdown has been reset because a new, more dominant setup has formed in the same direction.
• 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.