Reversal Radar

The Reversal Radar indicator is a unified exhaustion detection system that consolidates multiple independent reversal algorithms into a single visual tool to identify high-probability turning points. By visualizing confluence through stacked signals, it helps traders distinguish between isolated price fluctuations and high-conviction setups where multiple patterns align.

Usage

The indicator displays signals as a vertical stack of diamonds above or below the price bars. Each diamond represents a specific detector; colored diamonds indicate a triggered pattern, while ghost (white) diamonds signify that a specific detector did not fire on that bar.

• Bullish Signals (Below Bar): Features a 5-diamond stack including Liquidity Trap, Structural Divergence, Band Rejection, Panic Snap, and Capitulation Engulf.
• Bearish Signals (Above Bar): Features a 3-diamond stack consisting of Band Rejection, Structural Divergence, and Liquidity Trap.
• Confluence Scaling: A higher count of colored diamonds indicates stronger confluence and a potentially higher probability reversal zone.

Details

The script utilizes five distinct detection modules, some of which are gated by volatility (VIX) to ensure they only trigger during market capitulation events. The logic focuses on liquidity sweeps, RSI divergence, Bollinger Band extremes, and price action "snaps" (VIX-aware).

The detectors included are:

1. Liquidity Trap (Red): Identifies pivot reversals with wick rejections and liquidity sweeps.
2. Structural Divergence (Orange): Detects pivots at new extremes with RSI divergence against major structure.
3. Band Rejection (Light Blue): Finds candles closing outside Bollinger Bands followed by a rejection wick.
4. Panic Snap (Green): Long-only; identifies 5-bar waterfall declines snapping back during VIX spikes.
5. Capitulation Engulf (Purple): Long-only; identifies bullish engulfing patterns at the lower Bollinger Band during elevated VIX.

Settings

• Module Toggles: Enable or disable each of the 5 detectors (Liquidity Trap, Structural Divergence, Band Rejection, Panic Snap, Capitulation Engulf) independently.
• Min Detectors to Show: Sets the minimum number of active triggers required to display the diamond stack.
• Net Width: Adjusts the sensitivity of the internal algorithms (1 = Most restrictive, 3 = Widest).
• Session Blocking: Define a specific trading session and the number of minutes to filter out at the market open and close to avoid noise.
• Display: Options to toggle the Bollinger Band overlay and the Multi-Timeframe (MTF) Bias Table.
• Legend: Toggle and customize the on-chart reference for detector colors and names.

FAQ

What timeframes work best with this tool? The indicator is optimized for intraday reversal trading, particularly on the 3m to 15m timeframes for liquid instruments like SPY, QQQ, or NQ.

Why are some signals "Long Only"? The Panic Snap and Capitulation Engulf modules are specifically designed to catch "capitulation bottoms" which often occur during volatility spikes, a behavior unique to market bottoms rather than tops.

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