Reversal Signals & Trailing Stop

// This Pine Script® code is subject to the terms of the Mozilla Public License 2.0 at https://mozilla.org/MPL/2.0/
// © AlgoAlpha

//@version=6
indicator("Reversal Signals & Trailing Stop [AlgoAlpha]", "AlgoAlpha - Signals & Trailing Stop", overlay = true)

// Inputs

GROUP_BANDS = "Reversal Bands"
GROUP_TRAIL = "Trailing Stop"
GROUP_APPEARANCE = "Appearance"

midband_length = input.int(50, "Basis Length", minval = 2, group = GROUP_BANDS, tooltip = "Controls how quickly the center of the bands follows price. Lower values react faster; higher values are smoother.")
sample_memory = input.int(50, "Band Lookback", minval = 5, group = GROUP_BANDS, tooltip = "Sets how many past price moves are used to place the reversal bands. A longer lookback adjusts more slowly.")
move_percentile = input.int(90, "Band Width Coverage", minval = 1, maxval = 100, group = GROUP_BANDS, tooltip = "Controls how much past price movement the bands allow. Higher values create wider bands and fewer reversals.")
band_multiplier = input.float(2.0, "Band Width", minval = 0.1, step = 0.1, group = GROUP_BANDS, tooltip = "Widens or narrows both reversal bands. Higher values place them farther from the basis.")
 
allow_trail_interruptions = input.bool(false, "Opposite Signal Can Replace Trail", group = GROUP_TRAIL, tooltip = "Allows an opposite signal to end the active trail and start a new one. When off, the trail continues until price breaks it.")
atr_length = input.int(14, "Volatility Length", minval = 1, group = GROUP_TRAIL, tooltip = "Controls how quickly trail spacing adjusts when the market becomes calmer or more volatile.")
trail_distance_multiplier = input.float(2.1, "Trail Starting Distance", minval = 0.1, step = 0.1, group = GROUP_TRAIL, tooltip = "Sets how far the trail starts from price after a reversal. Higher values give price more room.")
bounce_width_multiplier = input.float(1.0, "Trail Bounce Zone Width", minval = 0.1, step = 0.1, group = GROUP_TRAIL, tooltip = "Sets the width of the stronger shaded area beside the trail. Higher values make it wider.")
invalidation_bars = input.int(2, "Trail Break Bars", minval = 1, group = GROUP_TRAIL, tooltip = "Sets how many bars in a row must trade beyond the trail before the trail ends.")
marker_offset_multiplier = input.float(0.15, "Signal Marker Distance", minval = 0.0, step = 0.05, group = GROUP_TRAIL, tooltip = "Sets the space between each signal marker and its reversal band. This only changes marker placement.")

show_trails = input.bool(true, "Show Trail", group = GROUP_APPEARANCE, tooltip = "Shows the active trailing stop and inner band lines.")
show_zones = input.bool(true, "Show Trail Shading", group = GROUP_APPEARANCE, tooltip = "Shows the light shading between price and the trail, including the stronger bounce zone.")
show_signals = input.bool(true, "Show Signals", group = GROUP_APPEARANCE, tooltip = "Shows bullish and bearish reversal markers.")
trail_line_width = input.int(2, "Trail Thickness", minval = 1, maxval = 5, group = GROUP_APPEARANCE, tooltip = "Thickness of the bullish and bearish trailing-stop lines.")
wide_zone_transparency = input.int(94, "Trail Shading Transparency", minval = 80, maxval = 100, group = GROUP_APPEARANCE, tooltip = "Controls the light shading between price and the trail. Higher values make it more transparent.")
bounce_zone_transparency = input.int(55, "Bounce Zone Transparency", minval = 0, maxval = 100, group = GROUP_APPEARANCE, tooltip = "Controls the stronger shaded area beside the trail. Lower values make it more visible.")
bearish_color = input.color(#ff1100, "Bearish Color", inline = "colors", group = GROUP_APPEARANCE, tooltip = "Color of bearish signals, trails, and bands above price.")
bullish_color = input.color(#00ffbb, "Bullish Color", inline = "colors", group = GROUP_APPEARANCE, tooltip = "Color of bullish signals, trails, and bands below price.")

// Directional move bands

candle_direction = close > open ? 1 : -1
candle_body = math.abs(close - open)
midband = ta.hma(close, midband_length)

var bullish_move_build = 0.0
var bearish_move_build = 0.0
var bullish_moves = array.new_float()
var bearish_moves = array.new_float()

while bullish_moves.size() > sample_memory
    bullish_moves.pop()
while bearish_moves.size() > sample_memory
    bearish_moves.pop()

if candle_direction < 0
    if bullish_move_build > 0
        bullish_moves.unshift(bullish_move_build)
    bullish_move_build := 0
else
    bullish_move_build += candle_body

if candle_direction > 0
    if bearish_move_build > 0
        bearish_moves.unshift(bearish_move_build)
    bearish_move_build := 0
else
    bearish_move_build += candle_body

upper_band = bullish_moves.percentile_nearest_rank(move_percentile) * band_multiplier + midband
lower_band = midband - bearish_moves.percentile_nearest_rank(move_percentile) * band_multiplier

// Reversal signals and trail state

atr = ta.atr(atr_length)
marker_offset = atr * marker_offset_multiplier
close_inside_bands = close >= lower_band and close <= upper_band
bullish_wick_rejection = barstate.isconfirmed and close_inside_bands and low < lower_band
bearish_wick_rejection = barstate.isconfirmed and close_inside_bands and high > upper_band

upper_trail_source = midband + (upper_band - midband) * trail_distance_multiplier
lower_trail_source = midband - (midband - lower_band) * trail_distance_multiplier

var trail_direction = 0
var last_signal_direction = 0
var float trail_value = na
var outside_count = 0

signal_can_start = trail_direction == 0 or allow_trail_interruptions
bullish_signal = signal_can_start and bullish_wick_rejection and last_signal_direction != 1 and (not bearish_wick_rejection or close >= open)
bearish_signal = signal_can_start and bearish_wick_rejection and last_signal_direction != -1 and (not bullish_wick_rejection or close < open)

if bullish_signal
    trail_direction := 1
    last_signal_direction := 1
    outside_count := 0
    bullish_start_distance = math.max(midband - lower_trail_source, atr * trail_distance_multiplier)
    trail_value := math.min(midband - bullish_start_distance, low - syminfo.mintick)
else if bearish_signal
    trail_direction := -1
    last_signal_direction := -1
    outside_count := 0
    bearish_start_distance = math.max(upper_trail_source - midband, atr * trail_distance_multiplier)
    trail_value := math.max(midband + bearish_start_distance, high + syminfo.mintick)
else if trail_direction == 1
    trail_value := math.max(trail_value, lower_trail_source)
    outside_count := low < trail_value ? outside_count + 1 : 0
    if outside_count >= invalidation_bars
        trail_direction := 0
        trail_value := na
        outside_count := 0
else if trail_direction == -1
    trail_value := math.min(trail_value, upper_trail_source)
    outside_count := high > trail_value ? outside_count + 1 : 0
    if outside_count >= invalidation_bars
        trail_direction := 0
        trail_value := na
        outside_count := 0
else
    trail_value := na

// Trail bands and visuals

price_midpoint = (open + close) * 0.5
bounce_band_width = ta.sma(ta.tr(true), atr_length) * bounce_width_multiplier
bullish_trail = trail_direction == 1 ? trail_value : na
bearish_trail = trail_direction == -1 ? trail_value : na
bullish_bounce_band = trail_direction == 1 and not na(bounce_band_width) ? math.max(trail_value, math.min(trail_value + bounce_band_width, price_midpoint)) : na
bearish_bounce_band = trail_direction == -1 and not na(bounce_band_width) ? math.min(trail_value, math.max(trail_value - bounce_band_width, price_midpoint)) : na

bullish_line_color = show_trails ? bullish_color : na
bearish_line_color = show_trails ? bearish_color : na
bullish_bounce_color = show_trails ? color.new(bullish_color, 25) : na
bearish_bounce_color = show_trails ? color.new(bearish_color, 25) : na
price_side_transparency = math.min(wide_zone_transparency + 4, 100)

price_midpoint_plot = plot(barstate.isfirst ? na : price_midpoint, "Price Midpoint", display = display.none)
bullish_trail_plot = plot(bullish_trail, "Bullish Reversal Trail", color = bullish_line_color, linewidth = trail_line_width, style = plot.style_linebr)
bearish_trail_plot = plot(bearish_trail, "Bearish Reversal Trail", color = bearish_line_color, linewidth = trail_line_width, style = plot.style_linebr)
bullish_bounce_plot = plot(bullish_bounce_band, "Bullish Bounce Band", color = bullish_bounce_color, linewidth = 1, style = plot.style_linebr)
bearish_bounce_plot = plot(bearish_bounce_band, "Bearish Bounce Band", color = bearish_bounce_color, linewidth = 1, style = plot.style_linebr)

fill(price_midpoint_plot, bullish_trail_plot, price_midpoint, bullish_trail, show_zones ? color.new(bullish_color, price_side_transparency) : na, show_zones ? color.new(bullish_color, wide_zone_transparency) : na, title = "Bullish Wide Zone", fillgaps = false)
fill(price_midpoint_plot, bearish_trail_plot, bearish_trail, price_midpoint, show_zones ? color.new(bearish_color, wide_zone_transparency) : na, show_zones ? color.new(bearish_color, price_side_transparency) : na, title = "Bearish Wide Zone", fillgaps = false)
fill(bullish_bounce_plot, bullish_trail_plot, bullish_bounce_band, bullish_trail, show_zones ? color.new(bullish_color, bounce_zone_transparency) : na, show_zones ? color.new(bullish_color, bounce_zone_transparency) : na, title = "Bullish Bounce Zone", fillgaps = false)
fill(bearish_trail_plot, bearish_bounce_plot, bearish_trail, bearish_bounce_band, show_zones ? color.new(bearish_color, bounce_zone_transparency) : na, show_zones ? color.new(bearish_color, bounce_zone_transparency) : na, title = "Bearish Bounce Zone", fillgaps = false)

plotshape(show_signals and bullish_signal ? bullish_trail - marker_offset : na, title = "Bullish Wick Reversal", style = shape.labelup, location = location.absolute, color = bullish_color, text = "▲", textcolor = color.white, size = size.small)
plotshape(show_signals and bearish_signal ? bearish_trail + marker_offset : na, title = "Bearish Wick Reversal", style = shape.labeldown, location = location.absolute, color = bearish_color, text = "▼", textcolor = color.white, size = size.small)

// Alerts

alertcondition(bullish_signal, title = "Bullish Reversal Signal")
alertcondition(bearish_signal, title = "Bearish Reversal Signal")