An outside reversal candle set up script with buy/sell signals. Looks simple but it's pretty powerful especially if combined with your choice confirming indicator.
The pattern psychology is this one (Frank Ochoa explanation): "The power behind this pattern lies in the psychology behind the traders involved in this setup. If you have ever participated in a breakout at support or resistance only to have the market reverse sharply against you, then you are familiar with the market dynamics of this setup.
[Basically, market participants are testing the waters above resistance or below support to make sure there is no new business to be done at these levels. When no initiative buyers or sellers participate in range extension, responsive participants have all the information they need to reverse price back toward a new area of perceived value.
As you look at a outside reversal pattern, you will notice that the current bar's low is lower than the
prior bar's low. Essentially, the market is testing the waters below recently established lows to see if a downside
follow-through will occur. When no additional selling pressure enters the market, the result is a flood of buying
pressure that causes a springboard effect, thereby shooting price above the prior bar's highs and creating the
beginning of a advance."
Siguiendo el verdadero espíritu de TradingView, el autor de este script lo ha publicado en código abierto, para que los traders puedan entenderlo y verificarlo. ¡Un hurra por el autor! Puede utilizarlo de forma gratuita, aunque si vuelve a utilizar este código en una publicación, debe cumplir con las Normas internas. Puede marcarlo como favorito para usarlo en un gráfico.
// Created by Cristian.D - from Secrets of a Pivot Boss - Frank Ochoa study(title="OutsideReversal", shorttitle="OReversal", overlay=true) // ReversalLong = low < low and close > high and open <close ReversalShort = high > high and close < low and open >open // Bar Colors and signals plotshape(ReversalLong, title= "ReversalLong", location=location.belowbar, color=lime, style=shape.arrowup, text="BUY") plotshape(ReversalShort, title= "ReversalShort", location=location.abovebar, color=red, style=shape.arrowdown, text="SELL") bgcolor(ReversalLong ==1 ? lime : ReversalShort==1 ? red : na, transp=70)