Exhaustion Analysis - Bullish and Bearish Exhaustion Points

Single Timeframe Exhaustion Analysis is an advanced Pine Script trading tool meticulously designed to provide traders with granular insights into market exhaustion and potential reversals by leveraging data from a single lower timeframe.

This script utilizes the request.security_lower_tf() function to pull high, low, close, and volume data from a user-specified lower timeframe, ensuring that the analysis is rooted in detailed, intraday price action rather than broader, less responsive data points.

At the heart of this indicator is a multi-faceted approach to market analysis, employing several key metrics that evaluate market efficiency, directional volume imbalances, and volume-to-price relationships.

The script calculates price efficiency as the relative movement of price compared to traded volume, offering a measure of how efficiently the market is absorbing buy and sell orders.

Directional imbalance is assessed by examining the dominance between buy-side and sell-side volumes, while volume-to-price ratios provide insight into the intensity of trading activity relative to price fluctuations.

Each of these metrics is computed across the entire range of lower timeframe data, generating individual values that are then aggregated and normalized.This normalization process ensures that no single metric dominates the analysis, instead creating a balanced composite view of market conditions.

The script’s normalization method scales these metrics into proportional ratios, allowing for consistent comparison across varying market states and ensuring adaptability in dynamic trading environments.

To enhance its detection capabilities, the indicator incorporates a multi-layered composite scoring system.

Three distinct composite scores are derived, each placing different emphasis on various market metrics, ranging from price efficiency and directional imbalance to volume dynamics and rate-of-change acceleration.These composite scores are then combined into a final composite score, which serves as the foundation for the script’s exhaustion and reversal detection logic.The script identifies exhaustion by comparing the final composite score against a historical percentile-based threshold, dynamically calculated over an extensive lookback period.


When market conditions reflect extreme exhaustion—either due to rapid price movements, volume surges, or directional imbalances—the script flags potential reversal zones.These exhaustion flags are visually represented as histogram plots, providing clear, real-time indicators of emerging market fatigue.

In addition to exhaustion detection, the indicator assesses potential directional reversals by integrating volatility-based range calculations.Utilizing a rolling average of price ranges, the script detects instances where the market breaks beyond typical price boundaries, signaling possible trend reversals.

Buy signals are generated when the price breaks above the previous high plus an adaptive range during periods of exhaustion, while sell signals occur when the price drops below the previous low minus the adaptive range under similar exhausted conditions.

To enhance usability, the script visually presents its analysis through multiple plots, including histogram representations of exhaustion flags, upward and downward reversal indicators, and the continuously updating final composite score.

Labels are dynamically added to the chart, marking buy and sell opportunities, ensuring that traders have clear, actionable insights at their fingertips.This script stands out for its meticulous use of lower timeframe data, comprehensive market metrics, and dynamic exhaustion detection, making it a valuable tool for traders looking to identify high-probability reversal points with precision and confidence.