QuanTAlib/lib/reversals/_index.md

Reversals

"Pivot point is hypothesis, not prophecy. Mathematics identifies levels where crowd psychology may shift. Market decides whether to respect calculation or ignore it entirely."

Tools indicating potential reversals, support/resistance, or pivot points. These indicators identify price levels where trend exhaustion or continuation decisions occur.

Implementation Status

Indicator	Full Name	Status	Description
FRACTALS	Williams Fractals	📋	Five-bar pattern identifying local peaks/troughs; marks support/resistance levels.
PIVOT	Pivot Points (Classic)	📋	Standard floor trader pivots with 7 levels (PP, R1-R3, S1-S3).
PIVOTCAM	Camarilla Pivot Points	📋	Mean-reversion pivots with 9 levels; R3/S3 are key reversal zones.
PIVOTDEM	DeMark Pivot Points	📋	Minimalist trend-following pivots with only 3 levels and conditional logic.
PIVOTEXT	Extended Traditional Pivots	📋	Extended pivots with 11 levels (R1-R5, S1-S5) for volatile markets.
PIVOTFIB	Fibonacci Pivot Points	📋	Fibonacci-ratio based pivots; Golden Ratio (61.8%) at R2/S2.
PIVOTWOOD	Woodie's Pivot Points	📋	Weighted close pivots (2× close weight) for intraday trading.
PSAR	Parabolic Stop And Reverse	📋	Trailing stop indicator that accelerates with trend; provides entry/exit signals via SAR dots.
SWINGS	Swing High/Low Detection	📋	Identifies significant price reversals and swing points using configurable lookback.

Selection Guide

For intraday trading: Classic PIVOT provides baseline levels. PIVOTWOOD emphasizes closing price for day-session context. PIVOTCAM targets mean-reversion at R3/S3 zones.

For swing trading: PIVOTFIB uses Fibonacci ratios aligned with retracement analysis. PIVOTEXT provides extended levels for multi-day moves. FRACTALS marks structural highs/lows.

For trend-following: PSAR provides trailing stop with acceleration. PIVOTDEM uses conditional logic based on prior bar relationship. SWINGS identifies trend reversal points.

For volatile markets: PIVOTEXT with 11 levels captures extreme moves. PIVOTCAM's outer levels (R4/S4) act as volatility breakout zones.

Pivot Point Comparison

System	Levels	Formula Basis	Trading Style
Classic	7	(H+L+C)/3	General purpose
Woodie	7	(H+L+2C)/4	Intraday, close-weighted
Camarilla	9	Range × multipliers	Mean-reversion
DeMark	3	Conditional on O/C relationship	Trend-following
Fibonacci	7	PP ± (H-L) × Fib ratios	Retracement alignment
Extended	11	Classic + outer levels	High volatility

Pivot Level Calculations

Level	Classic	Woodie	Camarilla
R4	—	—	C + (H-L) × 1.5/2
R3	2×PP - 2×L	—	C + (H-L) × 1.25/4
R2	PP + (H-L)	PP + (H-L)	C + (H-L) × 1.1/6
R1	2×PP - L	2×PP - L	C + (H-L) × 1.1/12
PP	(H+L+C)/3	(H+L+2C)/4	—
S1	2×PP - H	2×PP - H	C - (H-L) × 1.1/12
S2	PP - (H-L)	PP - (H-L)	C - (H-L) × 1.1/6
S3	2×PP - 2×H	—	C - (H-L) × 1.25/4
S4	—	—	C - (H-L) × 1.5/2

Reversal Pattern Types

Pattern	Indicator	Bars Required	Signal Type
Williams Fractal Up	FRACTALS	5	Resistance marked at middle high
Williams Fractal Down	FRACTALS	5	Support marked at middle low
Swing High	SWINGS	Configurable	Local maximum confirmation
Swing Low	SWINGS	Configurable	Local minimum confirmation
SAR Flip	PSAR	1	Trend reversal signal

PSAR Mechanics

Parabolic SAR uses acceleration factor that increases with each new extreme:

Parameter	Default	Range	Effect
Initial AF	0.02	0.01-0.05	Starting sensitivity
AF Step	0.02	0.01-0.05	Acceleration rate
Max AF	0.20	0.10-0.30	Maximum sensitivity

Higher AF values create tighter stops (more whipsaws, earlier exits). Lower AF values create wider stops (fewer signals, later exits).