Pivot Breakout Rules for Confirming V Bottom and V Top Reversals

Summary

This indicator identifies potential V bottoms and tops from deviation-based pivots, then marks a pattern confirmed when price breaks a selected reference level. A potential bottom begins when the close crosses above the last low pivot; a potential top begins when it crosses below the last high pivot. The script records a recent extreme and can invalidate a setup if price breaches that extreme or confirmation takes too long.

Confirmation can use the midpoint between pivots, the opposite pivot, the level of the first breakout, or no additional level. Candle body size relative to its recent exponential average filters initial and confirmation breaks, and the user can adjust pivot deviation, depth, and the maximum wait. The notes describe possible uses for reversal zones, scalping, or as a signal alongside volatility or momentum measures. The script provides no performance evidence, and its order-entry calls are commented out, so it displays labels rather than executing trades. Parameter behavior should be assessed for each market and timeframe; no risk controls or validation results are supplied.

Key ideas

• Deviation pivots define the high and low reference levels used to detect candidate reversals.
• A V bottom candidate starts with a close crossing above the low pivot, while a V top candidate starts below the high pivot.
• Confirmation requires a close to cross a configurable level and, in most modes, a candle body large enough relative to its recent average.
• Candidates can expire after a maximum number of bars or be invalidated by a move beyond the recorded extreme.
• The published script displays signals but has its long and short order calls disabled.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.