Reversal Signals
By LuxAlgoJun 14, 2023
Reversal Signals is an indicator on Vela, our next-generation charting platform, written in Pine Script®.
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Reversal Signals is the LuxAlgo counter-trend engine: it counts candle closes against fixed reference bars to flag where a directional push may be exhausting. Two phases structure every signal: a Momentum Phase seeking a completed 9-count (occasionally validated on the 8th candle), where each close must beat the close from four bars before, and a Trend Exhaustion Phase that follows with a 13-count, where each qualifying close must be at or below the low from two bars back (bullish count) or at or above the high from two bars back (bearish count).
The phases behave differently by design. Momentum aborts the moment its four-bar condition fails, while the exhaustion count pauses on non-qualifying candles, restarts if a fresh momentum phase in the same direction completes mid-count, is cancelled by an opposite momentum completion or by a close beyond the momentum resistance level (bullish count) or support level (bearish count), and otherwise extends until the 13th qualifying candle prints: the slower, higher-conviction read on trend exhaustion.
How to Trade the Reversal Signals?
- Momentum trades: act after a completed momentum phase, ideally where the count finishes into support or resistance.
- Exhaustion trades: completed 13-counts target deeper trend fatigue and more durable turns.
- Qualified trades: a completed exhaustion phase followed by a fresh momentum phase in the same direction forms the qualified setup class.
- L / S labels: long and short suggestions print on the chart, with cautionary markers when price action argues for continuation instead.
Alerts are available for phase completions, level crossovers, and activated setups. Counter-trend entries fail fast when a trend refuses to die, so confirm signals with independent analysis.
What the Reversal Signals Shows
Numbered counts print above or below candles as each phase progresses, letting a setup mature in plain sight. Completed phases leave levels to trade against: support and resistance lines plus stop/risk thresholds for trade management. Display options cover full phases or completions only.
Frequently Asked Questions
Free to use
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- Up to 500 strategy alerts, with webhook automation
- Up to 10× the chart history of Free
- Orderflow lookback up to full history
- More Quant usage to customize it, plus extra usage when you need it
- Futures data alongside crypto, stocks, forex and commodities
Also works on
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