Contrarian Reversal Zones
Script is showing potential reversal zones on chart, based on calculations of High/Low of selected period, smoothing it with selected type of Moving Average and applying Standard Deviation. Preferred to be used for contrarian traders. Another alternative usage would be to lock profit from open positions as this is very often early warning before reversal ahead.
Period for Low - period defining how long in past script is looking for Low, decreasing it increases sensitivity but also number of fake signals increase
Period for High - period defining how long in past script is looking for High, decreasing it increases sensitivity but also number of fake signals increase
Standard Deviation Period - period used for calculation standard deviation
Type of Moving Average - different types of Moving Average are possible to be selected for calculations
Script is showing red or green triangles next to candles, where probability of Reversal is identified. Therefore trader should closely observe situation on market and looking for chance to open new position or close existing one, if signal appears in opposite direction to already opened position.
Indicator is not identifying exact point of reversal - it should be treated rather as a zone and early warning sign. Very often Reversal Zone is transitioned into multiple candles, one after another.
Two custom alerts were added:
Beginning of Fear Zone - when on previous candle there weren't reversal signal and on last candle appeared Fear Zone signal (potential reversal into Long Position)
Beginning of Greed Zone - when on previous candle there weren't reversal signal and on last candle appeared Greed Zone signal (potential reversal into Short Position)