Trend + Reversal ProbabilityThis indicator is designed to show when a trend may be close to ending and when price may be preparing to move in the opposite direction. The goal is not to predict every turn perfectly, but to give a clear and simple warning that the current direction is losing strength.
When the market has been moving up for some time, the indicator looks for signs that buyers are becoming weaker. When the market has been moving down, it looks for signs that sellers are becoming weaker. Once these conditions appear together, the indicator shows that a reversal may be starting.
To keep it easy to read, the indicator should answer only three questions:
1. What is the current trend?
It should clearly say whether the market is currently bullish or bearish.
2. Is the current trend getting weaker?
It should show whether the trend is still strong or whether momentum is fading.
3. What is the probability of a reversal?
It should display a simple message such as:
Low reversal risk
Moderate reversal risk
High reversal risk
A good reversal indicator should avoid confusion. It should not overload the chart with too many signals. Instead, it should give one simple reading that anyone can understand immediately. For example:
Trend: Bullish
Reversal Risk: High
Meaning: Uptrend still active, but chance of turning downward is increasing
Or:
Trend: Bearish
Reversal Risk: Low
Meaning: Downtrend remains strong, no clear sign of reversal yet
The easiest way to build this kind of indicator is to combine three simple ideas:
Trend direction: determine whether price is above or below important moving averages.
Momentum weakening: check whether momentum is slowing down.
Exhaustion signal: detect when the move may have gone too far and is vulnerable to turning.
So the indicator becomes easy to understand because it does not just throw arrows on the chart. It explains the situation in plain language:
Current trend + strength of trend + chance of reversal
Pine Script® indicator
