Pressure Pivots - MPI

Pressure Pivots - MPI

A multi-factor reversal detection system built on a proprietary Market Pressure Index (MPI) that combines institutional order flow analysis, liquidity dynamics, and momentum exhaustion to identify high-probability pivot points with automated win rate validation.

What This System Does
This indicator solves the core challenge of reversal trading: distinguishing genuine exhaustion pivots from temporary retracements. It combines six independent detection mechanisms—divergence, liquidity sweeps, order flow imbalance, wick rejection, volume surges, and velocity exhaustion—weighted by reliability and unified through a custom pressure oscillator.

Three-Layer Architecture:

Layer 1 - Market Pressure Index (MPI): Proprietary volume-weighted pressure oscillator that measures buying vs. selling pressure using proportional intrabar allocation and dual-timeframe normalization (-1.0 to +1.0 range).

Layer 2 - Weighted Confluence Engine: Six detection factors scored hierarchically (divergence: 3.0 pts, liquidity: 2.5 pts, order flow: 2.0 pts, velocity: 1.5 pts, wick: 1.5 pts, volume: 1.0 pt). Premium signals (DIV/LIQ/OF) require 6.0+ score, standard signals (STD) require 4.0+ score.

Layer 3 - Automated Win Rate Validation: Every signal tracked forward and validated against actual pivot formation within 10-bar window. Real-time performance statistics displayed by signal type and direction.

The Market Pressure Index - Original Calculation
What MPI Measures: The balance of aggressive buying vs. aggressive selling within each bar, smoothed and normalized to create a continuous oscillator.

Calculation Methodology:
Step 1: Intrabar Pressure Decomposition
Buy Pressure = Volume × (Close - Low) / (High - Low)
Sell Pressure = Volume × (High - Close) / (High - Low)
Net Pressure = Buy Pressure - Sell Pressure

Step 2: Exponential Smoothing
Smooth Pressure = EMA(Net Pressure, 14)

Step 3: Normalization
Avg Absolute Pressure = SMA(|Net Pressure|, 28)
MPI Raw = Smooth Pressure / Avg Absolute Pressure

Step 4: Sensitivity Amplification
MPI = clamp(MPI Raw × 1.5, -1.0, +1.0)
Why This Is Different:

• vs. RSI: RSI measures price momentum without volume context. MPI integrates volume magnitude and distribution within each bar.

• vs. OBV: OBV uses binary classification (up bar = buy volume). MPI uses proportional allocation based on close position within range.

• vs. Money Flow Index: MFI uses typical price × volume. MPI uses intrabar positioning, revealing pressure balance regardless of bar-to-bar movement.

• vs. VWAP: VWAP shows average price. MPI shows directional pressure balance (who controls the bar).

MPI Interpretation:
• +0.7 to +1.0: Extreme buying pressure (strong uptrends, potential exhaustion)
• +0.3 to +0.7: Moderate buying pressure (healthy uptrends)
• -0.3 to +0.3: Neutral/balanced (ranging, consolidation)
• -0.7 to -0.3: Moderate selling pressure (healthy downtrends)
• -1.0 to -0.7: Extreme selling pressure (strong downtrends, potential exhaustion)

Critical Insight: MPI at extremes indicates pressure exhaustion risk, not automatic reversal. Reversals occur when extreme MPI coincides with confluence factors.

Six Confluence Factors - Detection Arsenal
1. Divergence Detection (Weight: 3.0 - Highest Priority)
Detects: Price making higher highs while MPI makes lower highs (bearish), or price making lower lows while MPI makes higher lows (bullish).

Why It Matters: Reveals weakening pressure behind price moves. Declining participation signals potential reversal.

Signal Type: Premium (DIV) - Historically highest win rates.

2. Liquidity Sweep Detection (Weight: 2.5)
Detects: Price penetrates recent swing high/low (triggering stops), then immediately reverses and closes back inside range.

Calculation: High breaks swing high by <0.3× ATR but closes below it (bearish), or low breaks swing low by <0.3× ATR but closes above it (bullish).

Why It Matters: Stop hunts mark institutional accumulation/distribution zones. Often pinpoints exact pivot points.

Signal Type: Premium (LIQ) - Extremely reliable with volume confirmation.

3. Order Flow Imbalance (Weight: 2.0)
Detects: Aggressive directional ordering where price consistently closes in upper/lower third of bars with elevated volume.

Calculation:
Close Position = (Close - Low) / (High - Low)
Aggressive Buy = Volume when Close Position > 0.65
Aggressive Sell = Volume when Close Position < 0.35
Imbalance = EMA(Aggressive Buy, 5) - EMA(Aggressive Sell, 5)
Strong Flow = |Imbalance| > 1.5 × Average
Why It Matters: Reveals institutional accumulation/distribution footprints before directional moves.

Signal Type: Premium (OF)

4. Wick Rejection Patterns (Weight: 1.5)
Detects: Pin bars, hammers, shooting stars where wick exceeds 60% of total bar range.

Why It Matters: Large wicks demonstrate failed attempts to push price, indicating strong opposition.

5. Volume Spike Detection (Weight: 1.0)
Detects: Volume exceeding 2× the 20-bar average.

Why It Matters: Confirms institutional participation vs. retail noise. Most effective when combined with wick rejection or liquidity sweeps.

6. Velocity Exhaustion (Weight: 1.5)
Detects: Parabolic moves (velocity >2.0× ATR over 3 bars) showing deceleration while MPI at extremes.

Calculation:
Velocity = Change(Close, 3) / ATR(14)
Exhaustion = |Velocity| > 2.0 AND MPI > |0.5| AND Velocity Slowing
Why It Matters: Extended moves are unsustainable. Momentum deceleration from extremes precedes reversals.

Signal Classification & Scoring
Weighted Confluence Scoring:

Each factor contributes points when present. Signals fire when total score exceeds thresholds:

Bearish Example:
+ At recent high (1.0)
+ Bearish divergence (3.0)
+ Wick rejection (1.5)
+ Volume spike (1.0)
+ Velocity slowing (1.5)
= 8.0 total score → BEARISH DIV SIGNAL

Bullish Example:
+ At recent low (1.0)
+ Liquidity sweep (2.5)
+ Strong buy flow (2.0)
+ Wick rejection (1.5)
= 7.0 total score → BULLISH LIQ SIGNAL
Dual Threshold System:

• Premium Signals (DIV/LIQ/OF): Require 6.0+ points. Must include divergence, liquidity sweep, or order flow. Higher win rates.

• Standard Signals (STD): Require 4.0+ points. No premium factors. More frequent, moderate win rates.

Visual Signal Color-Coding:

• Purple Triangle: DIV (Divergence signal)
• Orange Triangle: LIQ (Liquidity sweep signal)
• Aqua Triangle: OF (Order flow signal)
• Red/Green Triangle: STD (Standard signal)
• Yellow Diamond: Warning (setup forming, not confirmed)

Warning System - Early Alerts
Yellow diamond warnings fire when 2+ factors present but full confluence not met:

• At recent 10-bar high/low
• Wick rejection present
• Volume spike present
• MPI extreme or accelerating/decelerating

Critical: Warnings are NOT trade signals. They indicate potential setups forming. Wait for colored triangle confirmation.

Win Rate Validation - Transparent Performance Tracking
How It Works:

Signal Storage: Every signal recorded (bar index, price, type, direction)
Pivot Confirmation: System monitors next 10 bars for confirmed pivot formation at signal price (±2%)
Validation: If pivot forms within window → Win. If not → Loss.
Statistics: Win Rate = Validated Signals / Total Mature Signals × 100
Dashboard Displays:

• Overall win rate with visual bar
• Bearish signal win rate
• Bullish signal win rate
• Win rate by signal type (DIV/LIQ/OF/STD)
• Wins/Total for each category

Why This Matters:

After 30-50 signals, you'll know exactly which patterns work on your instrument:

Example Performance Analysis:
Overall: 58% (35/60)
Bearish: 52% | Bullish: 65%
DIV: 72% | LIQ: 68% | OF: 50% | STD: 38%
Insight: Focus on bullish DIV/LIQ signals (72%/68% win rate), avoid STD signals (38%), investigate bearish underperformance.

This transforms the indicator from signal generator to learning system.

Dynamic Microstructure Visualization
Fibonacci Retracement Levels
• Auto-detects last swing high + swing low
• Draws 11 levels: 0%, 23.6%, 38.2%, 50%, 61.8%, 78.6%, 100%, 127.2%, 161.8%, 200%, 261.8%
• Removes crossed levels automatically
• Clears on new signal (fresh structure analysis)
• Color gradient (bullish to bearish across range)
• Key levels (0.618, 0.5, 1.0) highlighted with solid lines

Support/Resistance Lines
• Resistance: 50-bar highest high (red, only shown when above price)
• Support: 50-bar lowest low (green, only shown when below price)
• Auto-removes when price crosses

Usage: Signals firing at key Fibonacci levels (38.2%, 50%, 61.8%) or major S/R zones have enhanced structural significance.

Dashboard - Real-Time Intelligence
MPI Status:
• Current pressure reading with interpretation
• Color-coded background (green/red/gray zones)

Signal Status:
• Active signal type and direction
• Confidence score with visual bar (20 blocks, color-coded)
• Scanning status when no signal active

Divergence Indicator:
• Highlights active divergence separately (highest priority factor)

Performance Stats:
• Overall win rate with 10-block visual bar
• Directional breakdown (bearish vs. bullish)
• Signal type breakdown (DIV/LIQ/OF/STD individual win rates)
• Sample size for each category

Customization:
• Position: 9 locations (Top/Middle/Bottom × Left/Center/Right)
• Size: Tiny/Small/Normal/Large
• Toggle sections independently

How to Use This System
Initial Setup (10 Minutes)
1. MPI Configuration:
• Period: 14 (balanced) | 5-10 for scalping | 21-30 for swing
• Sensitivity: 1.5 (moderate) | Increase if MPI rarely hits ±0.7 | Decrease if constantly maxed

2. Detection Thresholds:
• Wick Threshold: 0.6 (60% of bar must be wick)
• Volume Spike: 2.0× average (lower to 1.5-1.8 for stocks, raise to 2.5-3.0 for crypto)
• Velocity: 2.0 ATR (raise to 2.5-3.0 for crypto)

3. Confluence Settings:
• Enable Divergence (highest win rate factor)
• Pivot Lookback: 5 (day trading) | 8-10 (swing trading)
• Keep default weights initially

4. Thresholds:
• Premium: 6.0 (quality over quantity)
• Standard: 4.0 (balanced)
• Warning: 2 factors minimum

Trading Workflow
When Warning Fires (Yellow Diamond):

Note warning type (bearish/bullish)
Do not enter - this is preparation only
Monitor for full signal confirmation
Prepare entry parameters
When Signal Fires (Colored Triangle):

Identify type from color (Purple=DIV, Orange=LIQ, Aqua=OF, Red/Green=STD)
Check dashboard confidence score
Verify confluence on chart (wick, volume, MPI extreme, Fib level)
Confirm with your analysis (context, higher timeframe, news)
Enter with proper risk management

Risk Management (Not Provided by Indicator):
• Stop Loss: Beyond recent swing or 1.5-2.0× ATR
• Position Size: Risk 0.5-2% of capital per trade
• Take Profit: 2-3× ATR or next structural level

Performance Analysis (After 30-50 Signals)
Review Dashboard Statistics:

Overall Win Rate:
• Target >50% for profitability with 1:1.5+ RR
• <45% = system may not suit instrument
• >65% = consider tightening thresholds

Directional Analysis:
• Bullish >> Bearish = uptrend bias, avoid counter-trend shorts
• Bearish >> Bullish = downtrend bias, avoid counter-trend longs

Signal Type Ranking:
• Focus on highest win rate types (typically DIV/LIQ)
• If STD <40% = raise threshold or ignore STD signals
• If premium type <50% = investigate (may need parameter adjustment)

Optimize Settings:
• Too many weak signals → Raise thresholds (premium 7.0-8.0, standard 5.0-6.0)
• Too few signals → Lower thresholds or reduce detection strictness
• Adjust factor weights based on what appears in winning signals

What Makes This Original
1. Proprietary Market Pressure Index
Unique Methodology:
• Proportional intrabar allocation: Unlike binary volume classification (OBV), MPI uses close position within range for proportional pressure assignment
• Dual-timeframe normalization: EMA smoothing (14) + SMA normalization (28) for responsiveness with context
• Bounded oscillator with sensitivity control: -1 to +1 range enables cross-instrument comparison while sensitivity allows customization
• Active signal integration: MPI drives divergence detection, extreme requirements, exhaustion confirmation (not just display)

vs. Existing Indicators:
• MFI uses typical price × volume (different pressure measure)
• CMF accumulates over time (not bounded oscillator)
• OBV is cumulative and binary (not proportional or normalized)

2. Hierarchical Confluence Engine
Why Simple Mashups Fail: Most multi-indicator systems create decision paralysis (RSI says sell, MACD says buy).

This System's Solution:
• Six factors weighted by reliability (3.0 down to 1.0)
• Dual thresholds (premium 6.0, standard 4.0)
• Automatic signal triage by quality tier
• Color-coded visual prioritization

Orthogonal Detection: Each factor detects different failure mode:
• Divergence = momentum exhaustion
• Liquidity = institutional manipulation
• Order Flow = smart money positioning
• Wick = supply/demand rejection
• Volume = participation confirmation
• Velocity = parabolic exhaustion

Complementary, not redundant. Weighted synthesis creates unified confidence measure.

3. Self-Validating Performance System
The Problem: Most indicators never reveal actual performance. Traders never know if it works on their instrument.

This Solution:
• Forward-looking validation (signals tracked to pivot confirmation)
• Pivot-based success criteria (objective, mechanical)
• Segmented statistics (by direction and type)
• Real-time dashboard updates

Result: After 30-50 signals, you have statistically meaningful data on what actually works on your specific market. Transforms indicator into adaptive learning system.

Technical Notes
No Repainting:
• All signals use confirmed bar data (closed bars only)
• Pivot detection has inherent lookback lag (5 bars)
• Divergence lines drawn after confirmation (retroactive visualization)
• Signals fire on bar close

Forward-Looking Disclosure:
• Win rate validation looks forward 10 bars for pivot confirmation
• Creates forward bias in statistics, not signal generation
• Real-time performance may differ until validation period elapses

Lookback Limits:
• Fibonacci/S/R: Limited by limitDrawBars (default 100)
• MPI calculation: 28 bars maximum
• Signal storage: 20 per direction (configurable)

Visual Limits:
• Max lines/labels/boxes: 500 each
• Auto-clearing prevents overflow

Limitations & Disclaimers
Not a Complete Trading System:
• Does not provide stop loss, take profit, or position sizing
• Requires trader risk management and market context analysis

Reversal Bias:
• Designed specifically for reversal trading
• Not optimized for trend continuation or breakouts

Learning Period:
• Statistics meaningless until 20-30 mature signals
• Preferably 50+ for statistical confidence

Instrument Dependency:
• Best: Liquid instruments (major forex, large-caps, BTC/ETH)
• Poor: Illiquid small-caps, low-volume altcoins (order flow unreliable)

Timeframe Dependency:
• Optimal: 15m - 4H charts
• Not Recommended: <5m (noise) or >Daily (insufficient signals)

No Guarantee of Profit:
• Win rate >50% does not guarantee profitability (depends on RR, sizing, execution)
• Past performance ≠ future performance
• All trading involves risk of loss

Warning Signals:
• Warnings are NOT trade signals
• Trading warnings produces lower win rates
• For preparation only

Recommended Settings by Instrument
Forex Majors (15m-1H):
• MPI Sensitivity: 1.3-1.5 | Volume: 2.0 | Thresholds: 6.0/4.0

Crypto BTC/ETH (15m-4H):
• MPI Sensitivity: 2.0-2.5 | Volume: 2.5-3.0 | Velocity: 2.5-3.0 | Thresholds: 6.5-7.0/4.5-5.0

Large-Cap Stocks (5m-1H):
• MPI Sensitivity: 1.2-1.5 | Volume: 1.8-2.0 | Thresholds: 6.0/4.0

Index Futures ES/NQ (5m-30m):
• MPI Period: 10-14 | Sensitivity: 1.5 | Velocity: 1.8-2.0 | Thresholds: 5.5-6.0/4.0

Altcoins High Vol (1H-4H):
• MPI Period: 21 | Sensitivity: 2.0-3.0 | Volume: 3.0+ | Thresholds: 7.0-8.0/5.0 (very selective)

Alert Configuration
Built-In Alerts:

Bullish Signal (all types)
Bearish Signal (all types)
Bullish Divergence (DIV only)
Bearish Divergence (DIV only)
Setup:
• TradingView Alert → Select "Pressure Pivots - MPI"
• Choose condition
• Frequency: "Once Per Bar Close" (prevents repainting)
• Configure notifications (popup/email/SMS/webhook)

Recommended:
• Active traders: Enable all signals
• Selective traders: DIV only (highest quality)

In-Code Documentation
Every input parameter includes extensive tooltips (800+ words total) providing:
• What it controls
• How it affects calculations
• Range guidance (low/medium/high implications)
• Default justification
• Asset-specific recommendations
• Timeframe adjustments

Access: Hover over (i) icon next to any setting. Creates self-documenting learning system—no external docs required.

DskyzInvestments | Trade with insight. Trade with anticipation.