I’ve written VERY simple indicator, which may be used to build a reversal strategy.
Stupid Oscillator (SO)
How it works?
As input it takes number of candles.
The indicator reflects the percentage of long and short candles weighed by candle range.
It always stays between 0% and 100%, where 0% means, that all candles were short in the period, and 100% that all candles were long. 50% reading means, that there were exactly the same number of pips long and short.
How I believe it can be used?
It does decent job in identifying extremes on the chart. From first observations good “oversold” and “overbought” areas are 40/60 for period - 100
It gives rough area so it may be better for strategies which scale into position (average down?)
It seems that indicator tends to stay away from oversold/bought areas during range markets even with different dynamics. Percentage of pips strongly favors real moves and ranges offset themselves.
Below screen with potential buy sell areas (red green) and potential profit (light blue).
SO.ex4 (9.0 KB)