Reversal Signal Bars

Reversal Signal Bars
Indicator for NinjaTrader® 7/8

E-mini S&P 500 Future 5 min chart (click to enlarge)

 


Features

  • shows the following reversal signal bars or patterns (for a bullish reversal)
    IB (Inside Bar, a counter trend bar with a bullish close, contained by the prior bar)
    RVB (Reversal Bar, a bar with a bottom tail, a close above mid bar and open, also called Pin Bar)
    II (Inside Inside Pattern wit close above open, a small trading range or triangle and area of equilibrium)
    IOI (Inside Bar, Outside Bar and Inside Bar with close above open, often a second counter trend entry)
    OIO (Outside Bar, Inside Bar and Outside Bar with close above open, a possible double trapping pattern)
    2BR (Two Bar Reversal, a Bear Trend Bar and consecutive Bull Trend Bar)
    3BR (Three Bar Reversal, a Bear Trend Bar, followed by a pause bar (e.g. a doji) and a Bull Trend Bar)
    OO (two consecutive Outside Bars)
    OB (Outside Bar)
  • Barb Wire (a special kind of a tight trading range) 
  • configure minimum Signal Bar/Pattern size and minimum Overshoot of prior bars
  • configure bar size for 1st bar of session on a gap up/dn (for RTH traders, a large 1st bar of the day is often a trading range)
  • use as a discretionary indicator or for Automated Trading 
  • alert feature
  • does not work on HeikenAshi, Kagi, Renko, PointAndFigure and LineBreak charts

Example Charts


Download a 20 day trial version

Download for NinjaTrader 7  (how to install, see here for help)
Download for NinjaTrader 8  (how to install, see here for help)

Sound file .zip file  (how to install, see here for help)

All of our available paid indicators are distributed in one package.
This package also includes a chart template (“PA_Indicators_ES_5min”) .
After installing the indicator package into NinjaTrader, that chart template can be
used to show a possible setup of the indicators for the ES E-mini 5 minute RTH chart.

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Buy now for US $ 280

you get redirected to our reseller MyCommerce/Digital River/Share-it to place your order
to order you need your NinjaTrader® Machine ID (please see FAQ)
for license activation  (please see FAQ)


Can I simply trade every Reversal Signal?

This largely depends on context, trading style and stop loss (e.g. using a wider stop, than a bar stop), also on your ability to scale in. Please check out this separate post about Reversals.  Also check out the Blog for more examples on how to use Reversal Signal Bars in your trading.

How to enter on a Reversal Signal

There are several ways how to enter a trade on a reversal signal. All have advantages and disadvantages and finally depend on the market context and the trader.
Read more here: Reversal Signal Entry Strategies

Look for confluence

Confluence is very important in trading and means to have several (at least two) reasons to take a trade. Your 1st reason is the reversal signal bar/pattern and your 2nd reason can be e.g. support at HOY/LOY/COY, measured moves, trend line / trend channel line overshoot, Buying/Selling Pressure, Tick Failure Breakouts, breakout tests, a 2nd attempt to reverse and many more.

What do I need to set the minimum Signal Bar Size to?

Set the minimum Signal Bar Size depending on the instrument, time frame or bar type you are trading.
Signal Bar size also largely depends on the average daily range. Keep in mind, that reversals are extreme behavior. Strong reversals often have large Signal Bars. The range of a reversal bar is often around the average range of recent bars.
On large days on the ES E-mini future 5 minute chart you can get a reversal Bar of 20 point range (which is 80 ticks). On smaller days that can be 1.5 to 4 points only. Or take stocks, a reversal bar on the daily AMZN chart can have the size of $70, which is 7000 ticks. Experiment to find out the right settings for your instrument and time frame.
This is what I use to trade the ES E-mini 5 minute chart.

What do I need to set the minimum Overshoot to?

Set the minimum Overshoot depending on the instrument, time frame or bar type you are trading. Overshoot is also called “underlap” (opposite to overlap), which basically is the number of ticks, the Reversal Signal Bar/Pattern dips beyond the prior bar or bars.
It’s best to set the minimum Overshoot to at least two ticks. A too small minimum Overshoot and not enough breakout traders get trapped. Experiment to find out the right settings for your instrument and time frame.
This is what I use to trade the ES E-mini 5 minute chart.

What to do with “Barb Wire”?

Barb Wire is a special kind of a tight trading range, where the price action is confined to a narrow range made of small bars, many of which are dojis. If Barb Wire occurs just before a Reversal Signal, it can decrease the probability of a profitable trade.
Without a lot of experience it’s best to avoid trading “barb wire”. There is no real way to trade “barb wire” except to a fade breakout of it. This is because “barb wire” is a tight trading range and most trading range breakouts fail. Here is some more to read.
Nine Transitions Blog on “Barb Wire

Automated Trading

Only the NinjaTrader 8 version of the PAReversalSignalBars indicator is compatible with BloodHound from SharkIndicators or can be used in the Market Analyzer/Strategy Builder of NinjaTrader. You can call it as well from your own NinjaTrader indicators or strategies. Read more here.

What are the Settings?

Show Last 200 Bars only
Show the indicator signals only for the last 200 bars, which will speed up a reload of the chart or indicator

Sound Alert
Play a sound and show an alert in the alert window

Sound Alert File
Pick a .WAV file from the NinjaTrader sound folder (how to install sounds, see here )

Signal Bar
Enable or disable to show the different Reversal Signal Bars or Patterns

Signal Bar Color
Signal Bar Color and the thickness of the line to highlight them on the chart

Overshoot
Please see above “What do I need to set the minimum Overshoot to?”

Signal Bar Size
Please see above “What do I need to set the minimum Signal Bar Size to?”

Signal Bar Text
Enable or disable the display of text, text color, size and offset from Signal Bar high or low

 

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