In the book "Secrets of a Boss: Revealing Proven Methods for Profiting in the Market" by Franklin Ochoa, Four different types of reversal systems were introduced and patterns are used to find reversals. I will not write a lot about the book, you should get/read it for yourself. There are many great ideas in the book, Candlesetick Reversal System, Following Trend, Time Price Opportunity, Advanced Concepts and much more.
Reversal systems mentioned in the book are :
- Wick Reversal System
- Exteme Reversal System
- Outside Reversal System
- Reversal System
I tried to add these four reversal systems to the script. If you need detailed info you better read the book ;)
1) Out Side Reversal setup is working perfectly fine. Both long & short.
2) The logic for Extreme reversal set up is incorrect. Both long & short. The first bar is not getting considered in the logic; The body of the first bar of the pattern should encompass more than 50 percent of the bar's total range, but usually not more than 80-85 percent. The second bar should be opposite and close within the body of the first candle.
3) Wick reversal working on the long side (basically hammer), but not on short side (inverted hammer) , may have to fine tune. Some time not getting signal for long as well.
4) The logic for Doji reversal is not correct, not giving proper signal will have to involve 3 to 4 candles in the logic. Also a 10 period/SMA or EMA as per pivot boss. (one of the two bars following the doji must close below/above the low/high of the doji ) - We may not get a perfect doji, may have to do some adjust met in the logic to give signal. Eg; the Doji candle (10% of each other) should open and close above 95% or more of the body of the previous candle and one of the 2/3 bars following the doji must close below/above the low/high of the doji for short & Long.
If any way you can fix this, your indicator will be a kick-ass one.