Outside Bar Reversal Strategy on TradingView

In the world of trading, finding effective strategies that provide reliable entry and exit signals is crucial. One such strategy is the Outside Bar Reversal, a powerful tool designed to help traders identify potential market reversals with high accuracy. This indicator, available for TradingView, combines the precision of PineScript with a straightforward trading approach to offer buy and sell signals based on price action and market structure.

In this guide, we’ll dive into how the Outside Bar Reversal Strategy Indicator works on TradingView, how to set it up, and how it can help traders achieve a high win rate with minimal effort.

What is the Outside Bar Reversal Strategy Indicator?

The Outside Bar Reversal is a price action strategy that revolves around identifying key candlestick patterns to signal market reversals. The strategy primarily looks for candles that “envelop” the previous bar, meaning the current candle’s high is higher than the previous bar’s high, and the current candle’s low is lower than the previous bar’s low.

This indicator, when applied in TradingView, helps traders spot these outside bar setups, making it easier to act on potential market reversals. It provides clear buy and sell signals based on the behavior of price relative to key moving averages, such as the EMA 200.

Indicator Overview: How It Works on TradingView

The Outside Bar Reversal Strategy Indicator works on TradingView using PineScript. Once added to your chart, the indicator automatically detects outside bars and signals potential reversal points. This strategy is highly effective in trending markets, as it helps traders enter positions in the direction of the prevailing trend after a brief pullback or reversal.

Key Features:

• Buy Signal: The indicator triggers a buy signal when a candlestick closes above the high of the previous candle, indicating a bullish reversal. For further confirmation, the price must be above the EMA 200, which acts as a dynamic support in an uptrend.
• Sell Signal: Conversely, a sell signal is generated when a candle closes below the low of the previous candle, signaling a bearish reversal. The price must be below the EMA 200 for the sell signal to be valid, confirming that the market is in a downtrend.

These signals help traders enter positions at the right moment and minimize risk by setting appropriate stop loss levels and targeting favorable risk-to-reward ratios.

How Outside Bar Reversal Strategy Set Up the Indicator on TradingView

Setting up the Outside Bar Reversal Strategy Indicator on TradingView is simple. Follow these steps:

1. Open TradingView and go to the chart where you wish to apply the indicator.
2. Search for the Indicator: In the top panel, search for “Outside Bar Reversal Strategy” in the indicators tab.
3. Apply the Indicator: Click on the indicator to apply it to your chart.
4. Adjust Settings: Customize the settings to suit your trading style. You can adjust the EMA period, risk-to-reward ratio, and other parameters as needed.
5. Start Trading: Once the indicator is set up, monitor the buy and sell signals on your chart. These signals will guide you in making informed trading decisions.

Indicator Explanation: Buy and Sell Signals

The Outside Bar Reversal Strategy Indicator is designed to trigger buy and sell signals based on the following conditions:

1. Buy Signal:

• Condition 1: A candlestick closes above the previous candle’s high. This forms an outside bar, indicating a potential bullish reversal.
• Condition 2: The price must be above the EMA 200, confirming the prevailing uptrend. This adds further validation to the buy signal.
• Stop Loss: The stop loss should be set at the swing low (the low point of the previous candle), ensuring that the trade is protected in case the reversal fails.
• Take Profit: The take profit target is set based on a 1:2 risk-to-reward ratio, meaning the target is twice the distance of the stop loss from the entry point.

2. Sell Signal:

• Condition 1: A candlestick closes below the previous candle’s low, signaling a potential bearish reversal.
• Condition 2: The price must be below the EMA 200, confirming the downward trend. This ensures that the market is in a downtrend, adding strength to the sell signal.
• Stop Loss: The stop loss is set at the swing high (the high point of the previous candle), offering protection if the market reverses unexpectedly.
• Take Profit: Like the buy signal, the take profit is set at a 1:2 risk-to-reward ratio.

Why the Outside Bar Reversal Strategy Works

This strategy works well on TradingView because it is based on clear, actionable price patterns that reflect real market conditions. The use of the EMA 200 ensures that the strategy is aligned with the overall trend, reducing the risk of false signals and improving the likelihood of success.

Key Benefits:

• Simplicity: The strategy is easy to understand and implement, making it suitable for traders of all levels.
• High Win Rate: The combination of the outside bar pattern and the EMA 200 filter results in a high win rate, especially when trading in the direction of the trend.
• Risk Management: By using a fixed 1:2 risk-to-reward ratio, traders can effectively manage risk and maximize profits over the long term.

Why Use TradingView and PineScript for This Strategy?

TradingView is one of the best platforms for technical analysis, offering a user-friendly interface, real-time data, and a wide range of customizable indicators. PineScript, the scripting language used in TradingView, allows traders to develop custom indicators like the Outside Bar Reversal Strategy Indicator, giving them a powerful tool to automate and enhance their trading strategies.

By leveraging TradingView and PineScript, traders can access the flexibility and precision needed to make informed trading decisions. This combination ensures that the Outside Bar Reversal strategy works seamlessly, providing reliable signals for both beginner and experienced traders.

Final Thoughts

The Outside Bar Reversal Strategy Indicator for TradingView offers a straightforward yet powerful way to identify potential market reversals. By using clear buy and sell signals based on candlestick patterns and the EMA 200, traders can effectively capitalize on price reversals in trending markets.

Whether you’re new to trading or an experienced professional, this free indicator can be a valuable tool to add to your trading arsenal, helping you to achieve a higher win rate and improve your overall trading strategy. By setting up the indicator on TradingView and applying the PineScript code, you can automate your strategy and focus on executing your trades with confidence.

With proper risk management and discipline, the Outside Bar Reversal Strategy can become a cornerstone of your trading success.

Pinescript of Outside Bar Reversal Strategy on TradingView

Reach out to us at +91 7620658346 for access to this indicator. We offer algorithm development for TradingView, MT4/MT5, and trading bots.
Follow @algo_aakash on Instagram, YouTube, and Twitter for updates.

Disclaimer

The information provided in this article and any associated indicators is for educational purposes only. Trading in financial markets involves substantial risk, and there is no guarantee of profit.Outside Bar Reversal Strategy on TradingView, which may not accurately predict future market movements. Users are encouraged to conduct their own research, assess their risk tolerance, and consult with a licensed financial advisor before making any trading decisions. The author and developer of this indicator are not responsible for any losses incurred through its use. Please trade responsibly.