Bottom & Top Reversal

The Bottom & Top Reversal indicator identifies specific candlestick price action patterns that signal potential trend exhaustion and subsequent reversals.

Usage

The indicator can be used to spot short-term turning points in the market by identifying failed breakouts or sharp price recoveries.

• Bottom Reversal (Bullish): This occurs when the current candle opens at or below the previous close, dips below the previous candle's low (creating a "stop run" or new low), but ultimately rallies to close above the previous candle's close. This suggests strong buying pressure emerged at lower levels.
• Top Reversal (Bearish): This occurs when the current candle opens at or above the previous close, pushes above the previous candle's high, but fails to maintain those gains and closes below the previous candle's close. This suggests selling pressure overwhelmed buyers at the highs.

Users can interpret the lime green signals (BR) as potential long entries or short exits, and the red signals (TR) as potential short entries or long exits.

Details

The script focuses on price action relationships between the current and previous candles. Specifically, it looks for "outside" movement regarding the lows/highs but a "reclaim" relative to the previous close.

• Bottom Reversal Logic: Open ≤ Close[1], Open > Low[1], Low < Low[1], and Close > Close[1].
• Top Reversal Logic: Open ≥ Close[1], Open < High[1], High > High[1], and Close < Close[1].

The indicator includes a status table in the top-right corner to indicate if a pattern is active on the current bar, along with background highlights and visual shapes (arrows and labels) for historical review.

Settings

• Show Labels: Toggles the "BR" and "TR" text labels on the chart.
• Show Arrows: Toggles the triangle shapes above or below the candles.
• Show Bottom Reversal: Enables or disables the detection and display of bullish reversal patterns.
• Show Top Reversal: Enables or disables the detection and display of bearish reversal patterns.

FAQ

How do I access the Bottom & Top Reversal indicator?

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

What timeframes work best for this script?

While the patterns are applicable to any timeframe, they are often most significant on higher timeframes (1H, 4H, Daily) where price action signals carry more weight.

Can I set alerts for these patterns?

Yes, the script includes built-in alert conditions for both Bottom and Top Reversal patterns, allowing you to receive notifications immediately upon a bar close.