EMA50 + Stochastic OS/OB Flags

Script Description
Overview

This indicator combines a 50-period Exponential Moving Average (EMA50) with the Stochastic Oscillator to highlight potential reversal zones.
It is designed to identify price action when the market is trading near its medium-term trend level (EMA50) and the stochastic shows overbought or oversold conditions.

How It Works

The script plots the EMA50 on the chart.

A tolerance band (default ±0.5%) is applied so that only candles close within a narrow range of EMA50 are considered.

The Stochastic Oscillator is calculated using user-defined lengths and smoothing.

Bullish Flag appears when:

Price is near EMA50, and

%K < 20 (oversold) with %K crossing above %D.

Bearish Flag appears when:

Price is near EMA50, and

%K > 80 (overbought) with %K crossing below %D.

Plots & Signals

Orange line = EMA50

Green triangle = Bullish setup near EMA50

Red triangle = Bearish setup near EMA50

Alerts

Two built-in alerts are included:

Bullish Flag Alert → “Bullish Flag near EMA50 with Stoch K < 20”

Bearish Flag Alert → “Bearish Flag near EMA50 with Stoch K > 80”

Use Case

This indicator is best suited for traders looking to:

Identify mean-reversion opportunities near the EMA50 trendline.

Combine stochastic signals with trend context.

Spot high-probability reversal points for entries/exits.

Notes & Limitations

This is not a standalone buy/sell system. It works best when combined with market structure and volume analysis.

EMA length, stochastic settings, and tolerance range are all customizable.

Like any oscillator, the stochastic can stay extended during strong trends. Use caution in trending markets.