The Warrior Reversal Trading Indicator is designed to complement the Warrior Reversal Trading Strategy (http://www.warriortrading.com/reversal-trading-strategy/). This Indicator can be used for scanning or as a plotted red light / green light indicator on the charts.
When you load the Warrior Reversal Indicator on your chart you will have the ability to edit the filters.
RSI period = Default is 5min
RSI source = close
RSI upper min for top reversals = 80
RSI lower min for bottom reversals = 20
We found that the best reversals will occur when stocks have an RSI above 80 or below 20. Some traders may choose to tighten these filters or loosen them according to his or her preference.
Bollinger Band Cross Overs are a key component to this reversal strategy. This is how we separate all the noise from this Indicator.
Bollinger Band #1 is a 20 period Bollinger Band with a 2.0 standard deviation. This is considered the default bollinger band setting.
Bollinger Band #2 is a 10 period Bollinger Band with a 1.4 standard deviation. This is considered our Fast Moving Bollinger Band.
When the fast moving Bollinger Band crosses the slow moving Bollinger Band in the direction of the trend it is a good indicator of trend exhaustion. It will be at this point we consider the possibility of a Reversal Trade.