Reversal Signals & Trailing Stop

Reversal Signals & Trailing Stop identifies reversal attempts after price stretches away from a dynamic equilibrium. Instead of using fixed percentage bands or standard volatility envelopes, it measures the size of previous directional price moves and uses that information to position adaptive reversal bands around a moving basis.

When price rejects one of these bands with a wick and closes back inside the range, the script generates a reversal signal. Each signal starts a trailing stop that follows the move until price invalidates it. This allows the indicator to combine reversal detection with trade management in a single workflow.

• Dynamic Basis — A Hull Moving Average that acts as the center of the reversal bands and adapts to changing market direction. • Directional Move Bands — Upper and lower bands built from the historical size of bullish and bearish candle sequences, using percentile analysis instead of fixed volatility. • Wick Rejection — A reversal condition where price extends beyond a band but closes back inside it, showing rejection of the extreme move. • Trailing Stop — A one-directional stop that follows price after a reversal signal and remains active until price breaks it for the required number of bars. • Bounce Zone — A shaded region around the trailing stop that highlights the area where price interacts with the active trail.

• Watch for a bullish or bearish signal after price rejects one of the reversal bands and closes back inside the range. • Use the active trailing stop as a dynamic exit level while the trade remains valid. • Monitor the bounce zone to see where price is interacting with the trail during an active move. • Wait for the trailing stop to invalidate before treating the current reversal as complete. • Adjust the band coverage, band width, and trail distance to match the volatility of the market you are trading.