Trading Indicator Review and Enhancements

Overview of the First Pullback Indicator

• This Pine Script is designed to identify pullbacks and breakouts in the price movement by utilizing a combination of technical indicators, including a 20-period exponential moving average (EMA).

User Inputs

• rangeLength: The number of bars to consider for analysis (default = 10).
• pullbackBars: Lookback period for validating pullbacks (default = 3).
• pullbackThreshold: The minimum required price change to qualify as a pullback (default = 1 tick/pip).
• useEMAFilter: Option to enable or disable the EMA trend filtering (default = true).
• emaLength: The period for the EMA calculation (default = 20).

Trend Detection

• The script calculates the EMA and determines the current trend:
  • inUptrend: True if the close price is above the EMA.
  • inDowntrend: True if the close price is below the EMA.

Trading Range Detection

• Detects if the price is in a trading range by checking:
  1. Count of EMA crosses.
  2. Overlapping of bars (average bar size vs. high-low distance).
  3. Average True Range (ATR) for volatility.
• If certain conditions are met, the indicator will ignore pullback detection.

Pullback Detection

• Regular Pullbacks:

  • Bullish Pullback: Identified if the current low goes below the previous low and price is in an uptrend.
  • Bearish Pullback: Identified if the current high goes above the previous high and price is in a downtrend.

• Implied Pullbacks:

  • Bullish Implied Pullback: A bearish candle in an uptrend (not followed by a regular pullback).
  • Bearish Implied Pullback: A bullish candle in a downtrend (not followed by a regular pullback).

Breakout Detection

• Breakout Up: Detected when price crosses above the EMA after not having detected a regular pullback.
• Breakout Down: Detected when price crosses below the EMA after not having detected a regular pullback.

Bar Coloring & Table

• Bars are colored based on conditions:

  • Purple: Breakout bars.
  • Red: Regular bullish pullbacks.
  • Green: Regular bearish pullbacks.
  • Orange: Implied bullish pullbacks.
  • Dark Yellow: Implied bearish pullbacks.

• A visual table is displayed in the top-right corner, reflecting definitions and colors of different pullbacks and breakout types for easy reference.

Further Enhancements

• Resetting of implied pullbacks if a regular pullback has occurred.
• Alerts can be added for pullbacks, breakouts, and significant trend changes.
• Additional adjustments such as table styling and positioning can be made as needed.