The purpose of this indicator is to be able to find turning points in time and or within a predetermined distance.
The indicator itself is using RSI2 reversal divergences on the 30M time frame. It is sensitive and insensitive enough to be the best for the job. (For RSI2 continuation divergences I would use the hourly.)
Besides the sensitivity there is a chronological order of events that prepares the turn itself.
- Blood in the Street / Blood on the Trading Floor
Before we are looking for a reversal divergence, there has to be blood, the market has to have bled. There is of course red blood and green blood depending on who bled out: the bulls or the bears.
The Drive / Thrust or Drive / Crash or Bleeding / Turning are exchangeable ideas about the market’s personality.
2. The divergence
All vertical lines are the ending points of reversal divergences.
The vertical line determines a point in time when the divergence took place if the next 30 minutes starts with absolutely no kick back / recoil. These lines get a magenta accent to draw attention to the urgency: you have to go in in the opposite direction at market ASAP. “El Desperato” stands for a desperate action, and similarly on the receiving end the turn would likely come with a sense of urgency.
The first vertical line with a new color determines a turning range. This range usually starts from the close of the marked candle and expands to 17 pips beyond the outside edge of the same candle.
I suggest scaling in in the area covered by the shown numbers, for instance after calculating your trading size based on your equity, you may want to go in with
- 1/4th just beyond the close of the highlighted candle
- 1/4th at the second number (usually 8 pips beyond the outer limit)
- 1/2 at the third number (usually 17 pips beyond the outer limit)
Yes, you may get as many as 4, even 5 reversal divergences in a row, but what matters is the zone defined by the firs one & you would seldom see anything further than 20 pips from that candle.
a) skull and bones / pirate’s peak
Things don’t always go to plan, why would they?
There are a number of conditions that can throw things off.
One such finding is the skull and bones ︵‿ toxic strength. Breaking the pirate’s peak is a continuation in the charge. If you go back to the first image, you will see an example where the pirate’s peak was not exceeded.
This condition is being utilized to increase the displacement of the range and also to pass out on a reversal call due to close proximity in time to a pirate’s peak charge.
b) flip the bird
The flip the bird can only be identified after the sequence has printed: it has to be a 2-hour sequence (4 candles long), end on a high note and the starting RSI reading has to be between 5 and 20.
On the example above you can see some recoil on the next candle which is an opportunity to get in on a promising continuation: the bleeding logic gets a null, so a full bleeding + divergence has to occur before the market gets done.
Below is another exemplar but in this case the recoil itself set a reversal divergence first.
4. Other features
Here’s where Mike gets a little Massey.
I lifted some features for the sense of direction and limits.
The diamonds are the girl’s best friend and they represent the last 4-hour consolidation mean.
The overbought and oversold are 64 pips away (2x 32 = fluctuation size of EUR/USD).
The sound barriers are closer by 20 pips, and they would limit some attempts in the wrong direction. Wave ones tend to fail here / before hitting the overbought / oversold.
The 1x fade is a one time fade (20 pips into the overbought/oversold) like its name says, and almost any move can be faded for a move back to the overbought / oversold neckline for a good scalp.
Sorry for all this, but old rabbits don’t die. They explode. I should know, my great-grandfather used to have a rabbit farm.
In closing I would like to mention to use this indicator in combination with Axel S. and 99-Lines for more love and understanding.
The Crack Ho on the bottom is the sister of the 60 min 60 sample Stoch D, here it is 120.
New experimental feature plotting the turning blocks
Human logic as the second row conclusion