Smart Multi-Confirm Reversal Detector

How the Smart Multi-Confirm Reversal Detector Works

The indicator works by analyzing candlestick patterns, trend, and technical confirmations and then scoring each bar to determine the strength of a potential reversal. Here’s the step-by-step logic:

Step 1: Analyze Candlestick Patterns

For each new candle, the indicator checks if any of the selected patterns occur:

Wick Reversal (Long Lower Wick):

Looks for candles with a small body and a long lower shadow.

Indicates buying pressure (potential bullish reversal).

Inverted Wick (Long Upper Wick):

Looks for candles with a small body and a long upper shadow.

Indicates selling pressure (potential bearish reversal).

Body Engulf:

The current candle completely “engulfs” the previous candle.

Signals a strong change in momentum.

Tweezer Patterns:

Two consecutive candles with almost identical highs or lows.

Suggests a potential reversal zone.

3-Bar Pattern:

Three consecutive bullish or bearish candles in a row.

Shows strong momentum continuation or exhaustion, used to confirm reversal.

Each pattern can be turned on/off by the user. If a pattern is detected, it contributes points to the overall signal score.

Step 2: Confirm Trend Direction

The indicator checks EMA trend alignment:

Fast EMA vs Slow EMA:

Fast EMA above Slow EMA → bullish trend.

Fast EMA below Slow EMA → bearish trend.

Optional Higher Timeframe EMA (HTF) Alignment:

Checks if the trend on a higher timeframe matches the current trend.

Adds extra weight to the signal if alignment is true.

This ensures the signal goes in the direction of the prevailing trend, reducing false signals.

Step 3: Check Technical Confirmations

Optional filters increase reliability:

ADX (Average Directional Index):

Measures the strength of the current trend.

Only strong trends contribute to the score.

RSI (Relative Strength Index):

Bullish confirmation: RSI is oversold.

Bearish confirmation: RSI is overbought.

Volume Spike:

Compares current volume to the average volume.

High volume validates the signal’s momentum.

Body Momentum:

Compares current candle’s body size to its average.

Larger than average body indicates stronger momentum.

Each of these confirmations can be enabled/disabled and has a weight in the scoring system.

Step 4: Calculate Score

Each pattern and confirmation has a user-defined weight (0–100).

The indicator sums the active weights that pass conditions and normalizes to 100.

Example:

Wick Reversal detected → 30 points

Trend EMA confirmed → 15 points

ADX confirmed → 10 points

Score = 55/100 → may or may not trigger a signal depending on threshold.

Score Threshold:

Only bars above the user-defined threshold are considered a confirmed signal.

Bars above a lower “label threshold” still show a label, even if not strong enough for alerts.

Step 5: Visualize Signals

Bullish Signals: Green triangle below the candle.

Bearish Signals: Red triangle above the candle.

Labels: Show the type of pattern and the score.

Purpose: Quickly identify potential reversals and assess their strength visually.

Step 6: Optional Alerts

Fixed alert messages can be enabled for confirmed bullish or bearish signals.

Alerts do not recommend trades; they just notify you of pattern confirmations.

Complies with TradingView’s policy for safe alert use.

Step 7: Weighted Decision

The final decision is not binary.

Instead, the indicator combines multiple signals into a score, so stronger signals are more reliable.

This reduces false positives and gives traders a professional, multi-confirmation approach to detect potential reversals.