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This indicator is based on the classic Profitunity strategy from the «Trading Chaos» book by Bill Williams.
The indicator displays the possible reversals as arrows, and also generates a sound signal.
The Chaos Trading arrow indicator consists of: Alligator, Awesome Oscillator (AO) and Fractals.
It also uses the «Bullish/Bearish reversal bar» pattern.
The indicator forms signals according the following principles:
- The «Bullish/Bearish reversal bar» pattern is formed at a large enough distance from the alligator.
- Next, the indicator algorithm starts the calculation of bars on the AO histogram. After three consecutive bars with the same color appear (green for buy, red for sell), proceed to the third.\
- After the second signal triggers the algorithm looks for a point for the third entry, that is, for the condition of fractal formation - two bars with lower highs or higher lows.