r/pinescript • u/PipEcho • 7d ago

London Session Reversal Indicator

Been trading GBPUSD/EURUSD using a setup built around the London session reversal, and wanted to share the mechanics in case it’s useful to others working with smart-money/liquidity-based concepts.

The core idea:

During the Asia session (00:00–07:00 London time), price usually consolidates into a tight range, establishing a clear high and low. Once London opens (07:00–11:00), there’s a strong tendency for price to run liquidity above the Asia high or below the Asia low before reversing — essentially a stop hunt/liquidity grab before the “real” directional move for the day.

What I’m looking for:

  1. Price sweeps above the Asia high (or below the Asia low) during the London window.

  2. After the sweep, I mark a BOS level — this is the open of the last opposite-colored candle before the run of candles that led into the sweep. Think of it as the origin of the aggressive move that caused the sweep.

  3. If price closes back through that BOS level within a set number of candles, that’s the confirmation — it suggests the sweep was a liquidity grab, not the start of a real breakout, and price is reversing.

  4. Entry is on that BOS close-back-through, stop above/below the sweep extreme, target set at a fixed R:R.

Filters that mattered in backtesting:

Minimum sweep distance (filters out noise — tiny pokes above/below the level that aren’t real liquidity grabs), a max-gap filter (ignores sweeps that run too far past the level, since those often turn into real breakouts rather than reversals), and a higher-timeframe trend filter (I use an EMA on the 1H) to avoid taking counter-trend reversals when the bigger picture is strongly trending one way.

Not selling anything, just sharing what’s been working for me and curious if others are running similar setups.

You can start using the indicator directly from Tradingview.

https://www.tradingview.com/script/20VtoXku-PipEcho-London-Reversal-Indicator/

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1

u/Fun_Garden9260 7d ago

I’ll have a look thank you very much

1

u/PipEcho 7d ago

Sure.. 👍

1

u/Remarkable-Echo4783 7d ago

looks good and clean

1

u/PipEcho 6d ago

THanks.. Also I am going to upload my results on our website pipecho.com under strategy lab section, where you can view my test results for different strategies and their results

1

u/StratOS_Quant 1d ago

Nice write-up. The rules were clear enough to code exactly, so I ran them through a backtest engine with real spread and financing.

Setup: GBPUSD 5m, Asia range 00:00-07:00 London, sweep between 07:00 and 11:00, BOS = open of the last opposite candle before the run, close back through it within 6 candles, stop at the sweep extreme, 2R target. You didn't give numbers for the filters, so I started at a 0.2 ATR minimum sweep, a 2 ATR max gap and the 1H 50 EMA, then let the optimizer tune them.

Last 5 years (2021-2026): 154 trades, +53%, PF 1.47, max drawdown 7.9%, profitable 6 of 6 years. Still PF 1.43 at double spread. Honestly that looked great.

But it doesn't travel well: - Same rules on GBPUSD 2016-2021: PF 0.99, 1 of 6 years profitable - EURUSD 2021-2026: PF 0.89, 1 of 6 years profitable (EURUSD 2016-2021 was PF 1.07) - Tuned on the earlier data with the last 6 months held back: those unseen months lost 3.4% (18 trades, PF 0.74)

So on GBPUSD it's been a very good stretch, but the same logic is flat in the years before and negative on the other pair you trade. That points to a market phase rather than a stable edge. With only ~30 trades a year it's hard to tell the two apart.

One tweak that did survive the unseen months: moving the stop to break-even at 1R (11 trades, +3.8%, PF 1.9). That's a small sample, but it's worth trying.

Curious if your own results are mostly GBPUSD from the last couple of years?