Indicators Description

1. Component Deconstruction¶

A. Support/Resistance (SR) Retest Module¶

• Core Function: ta.highest(high, lookback) and ta.lowest(low, lookback)

• Specific Configuration:

  • Lookback Period: lookback = 50 bars.

  • Price Source: high and low.

  • Confirmation Bars: confirmBars = 2 bars.

• Functional Modification: The module employs a historical offset via [confirmBars]. The plotted support (srLow_fixed) and resistance (srHigh_fixed) levels are not the highest/lowest values of the most recent 50 bars. Instead, they are the highest/lowest values from the 50-bar window that concluded two bars ago.

  • Mathematical Logic: srHigh_fixed on the current bar is equal to the value of ta.highest(high, 50) from two bars prior.

  • Intended Effect: This creates static, non-repainting price levels for the current and subsequent bar to interact with. By “fixing” the S/R levels from two bars ago, the script establishes a stable benchmark, preventing the S/R lines from shifting if the current bar makes a new high or low within the lookback period. This is critical for the “touch and reject” logic, as it provides a constant value to test against.

B. Bollinger Bands (BB)¶

• Core Function: ta.sma() and ta.stdev()

• Specific Configuration:

  • Length: bb_length = 15 bars.

  • Price Source: close.

  • Standard Deviation Multiplier: bb_mult = 2.0.

• Functional Modification: This is a standard, unmodified implementation of Bollinger Bands.

  • Basis: A 15-period Simple Moving Average of the closing price.

  • Deviation: The 15-period standard deviation of the closing price, multiplied by 2.0.

  • Bands: The upper and lower bands are calculated by adding/subtracting the deviation from the SMA basis.

C. Quantum Trend Flow (QTF) Channel¶

• Core Function: A custom-built volatility channel.

• Specific Configuration:

  • Channel Length: qtf_len = 20 bars.

  • Volatility Multiplier: qtf_mult = 2.0.

  • Price Source: close.

• Functional Modification: This is a non-standard, “hacked” volatility channel that synthesizes two distinct volatility metrics.

  • Basis: ta.ema(close, 20). A 20-period Exponential Moving Average serves as the channel’s centerline, providing a faster-reacting trend baseline than the BB’s SMA.

  • Mathematical Logic (Deviation): The channel width is determined by a composite volatility value: (ta.atr(20) + (2.0 * ta.stdev(close, 20))) / 2.

    1. ta.atr(20): The 20-period Average True Range measures volatility based on the full high-low range of the candles.

    2. 2.0 * ta.stdev(close, 20): A 20-period, 2.0 multiplier Standard Deviation measures volatility based on the dispersion of closing prices around the mean.

  • Intended Effect: By averaging ATR and Standard Deviation, the channel creates a hybrid volatility measurement. It is sensitive to both the intraday price range (from ATR) and the closing price volatility (from STDEV). This aims to create a more robust and adaptive channel that captures different facets of market volatility compared to a single-metric indicator like Bollinger Bands.

D. Multi-Timeframe (MTF) Trend Filter¶

• Core Function: request.security()

• Specific Configuration:

  • Higher Timeframe: mtf_res = "15" (15-minute chart by default).

  • Trend Indicator: A 50-period Exponential Moving Average (ta.ema(close, 50)).

• Functional Modification: This is a standard implementation of an MTF trend filter.

  • Logic: It fetches the 15-minute closing price and the 15-minute 50 EMA. The trend direction (mtf_trend_dir) is set to 1 (bullish) if the 15-minute close is above its 50 EMA, and -1 (bearish) otherwise. This value is then used as a gatekeeper for trade signals.

2. Logic Layering & Confluence¶

The script’s engine is built on a strict, hierarchical filtering system designed to identify high-probability mean-reversion setups by demanding a confluence of conditions.

• Interaction Dynamics: The core dynamic is Confluence of Threshold Crosses. The engine does not look for divergences or complex patterns. Its primary function is to detect the single-bar event where price pierces a trifecta of support or resistance boundaries.

• Hierarchical Filtering: The logic is layered to progressively increase signal quality and reduce noise.

  1. Layer 1: The Confluence Zone: The script first establishes three distinct support/resistance zones:

     • Static Price Zone: The srHigh_fixed / srLow_fixed levels.

     • Statistical Deviation Zone: The bb_upper / bb_lower bands.

     • Hybrid Volatility Zone: The qtf_upper / qtf_lower channel.

  2. Layer 2: The “Touch & Reject” Filter: This is the foundational filter and the heart of the strategy. It requires a two-part condition on a single candle:

     • The Touch (buyTouch/sellTouch): The low of the candle must pierce all three support boundaries, or the high must pierce all three resistance boundaries. This confirms the price overextension.

     • The Reject (buyReject/sellReject): The close of that same candle must be back inside all three of the corresponding boundaries. This confirms the failure of the move and the immediate reversal pressure. A candle that pierces all three but closes outside even one of them will not generate a signal.

  3. Layer 3: The “Gatekeeper” Trend Filter: The optional MTF filter (mtf_check_long/mtf_check_short) acts as a strategic overlay. If enabled, it functions as a master gatekeeper. A valid “Touch & Reject” signal will be discarded if it does not align with the broader trend on the higher timeframe (e.g., a BUY signal will be blocked if the 15-minute trend is bearish).

  4. Layer 4: The Temporal Filter: The last_signal variable acts as a simple state machine to prevent signal spam. It ensures that a new BUY signal cannot be generated if the immediately preceding signal was also a BUY, and vice-versa for SELL signals. This forces the script to alternate between long and short signals, improving chart clarity.

3. The Execution Engine¶

A. Boolean Logic (Trigger Conditions)¶

The final trigger for a signal is a boolean true value returned by finalLong or finalShort.

• Long Signal (finalLong): A true signal is generated if and only if all four of the following conditions are met on the same bar:

  1. low <= srLow_fixed AND low <= bb_lower AND low <= qtf_lower

  2. close > srLow_fixed AND close > bb_lower AND close > qtf_lower

  3. mtf_check_long == true (This condition is always true if the MTF filter is disabled).

  4. last_signal != 1 (The previous signal was not a BUY).

• Short Signal (finalShort): A true signal is generated if and only if all four of the following conditions are met on the same bar:

  1. high >= srHigh_fixed AND high >= bb_upper AND high >= qtf_upper

  2. close < srHigh_fixed AND close < bb_upper AND close < qtf_upper

  3. mtf_check_short == true (This condition is always true if the MTF filter is disabled).

  4. last_signal != -1 (The previous signal was not a SELL).

B. Mathematical Constants (Risk Profile)¶

The script does not contain programmatic exit logic (e.g., strategy.exit). Instead, it visualizes a potential trade outcome using the “Dynamic RR Box” feature, which is governed by hard-coded percentage-based inputs.

• Stop Loss: rr_sl_pct = 0.5%

• Take Profit: rr_tp_pct = 1.0%

• Significance:

  • These constants define a fixed, non-adaptive risk-to-reward profile. By default, the script suggests a 1:2 Risk-to-Reward Ratio (risking 0.5% to gain 1.0%).

  • The Stop Loss and Take Profit levels are calculated as a static percentage of the entry price (close of the signal bar). This means the risk is not adjusted for market volatility. A 0.5% stop will represent a different number of points/pips depending on the asset’s price and will not widen during periods of high ATR, unlike a volatility-based stop. This design choice prioritizes a consistent R:R structure over a volatility-adaptive one. The TradeTracker object and array manage the drawing of these boxes, extending them bar-by-bar until the high or low of a subsequent candle touches the calculated TP or SL price level.