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 bullish 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 bullish advance."
If anyone wants to solve the lack of BUY signals then do this:
At the end of line 6 change "close" to "open".
So it looks like this: ReversalLong = low < low[1] and close > high[1] and open < open[1]
At the end of line 6 change "close" to "open".
So it looks like this: ReversalLong = low < low[1] and close > high[1] and open < open[1]