Wave Reversal Indicator: Legs Plus A Divergence Test

Written by Dominic Walsh · Published 14 Jul 2026 · Last updated 9 Sep 2026

The wave reversal indicator draws swing legs and then judges them. A new swing low that undercuts the previous one, while RSI reads higher than it did there, is divergence. The reading also has to sit below `InpOversold`. Both conditions decide whether a leg earns a mark.

This build ships as a compiled .ex4 for MT4 and .ex5 for MT5; the screenshots below come from EURUSD H1.

Platforms	MT4 (.ex4) + MT5 (.ex5)
Chart window	Main price chart
Plots	3: Wave Leg, Wave Buy, Wave Sell
Alerts	popup, push notification, email, sound
Inputs	12

What the Wave Reversal Indicator draws on the chart

Wave Leg is the medium turquoise section line joining confirmed swings.

Wave Buy places a spring green arrow at a qualifying swing low.

Wave Sell places an orange red arrow at a qualifying swing high.

Marks sit `InpArrowGapPoints` `20` from the wick.

• Wave Leg: section, medium turquoise, width 2
• Wave Buy: arrow, spring green, width 2, arrow code 233
• Wave Sell: arrow, orange red, width 2, arrow code 234

How the Wave Reversal Indicator calculates its values

Building the legs

A swing needs `InpDepth` `6` bars on each side that fail to beat it. Confirmed swings alternate, and each replaces the previous entry when a more extreme one appears on the same side.

Testing for divergence

diverg needs the new swing low below the previous one while iRSI at `InpRsiPeriod` `14` reads higher than it did at that earlier swing. The sell case reverses both comparisons.

Adding a bias gate

A buy also needs the reading below `InpOversold` `45.0`. A sell needs it above `InpOverbought` `55.0`. `InpMinBarsBetween` `5` then blocks a second mark on the same side within five bars.

How to read the signals

The turquoise line shows which swings the divergence test compared.

Both conditions have to hold, so a divergence in the middle of the range prints nothing.

Marks arrive `InpDepth` bars after the swing they describe.

Widening the gap between the two bias levels makes marks rarer.

Alert channels in this build: popup, push notification, email and sound, one message per closed bar.

The alert block sits behind `EnableAlerts`, which starts on, and `EnablePopup` carries the message. `EnablePushNotify`, `EnableEmail` and `EnableSound` all begin false. `SoundFile` picks the clip. Swings confirm on closed bars, one message per bar.

Every Wave Reversal Indicator input

Core settings

Setting	What it does	Default
InpDepth	Fractal swing depth (bars each side). Bars each side of a swing, default `6`.	6
InpRsiPeriod	RSI momentum period. Length of the momentum reading, default `14`.	14
InpOverbought	RSI bias to allow a SELL reversal. Level a sell reversal needs the reading above, default `55.0`.	55.0
InpOversold	RSI bias to allow a BUY reversal. Level a buy reversal needs the reading below, default `45.0`.	45.0
InpMinBarsBetween	Min bars between same-side signals. Bars kept between same-side marks, default `5`.	5

Display settings

Setting	What it does	Default
InpArrowGapPoints	Arrow offset from wick (points). Mark distance from the wick in points, default `20`.	20

Alert settings

Setting	What it does	Default
EnableAlerts	Master switch for the leg reversal alerts, default `true`.	on
EnablePopup	Terminal dialog on a leg reversal, default `true`.	on
EnablePushNotify	Phone push on a leg reversal, default `false`.	off
EnableEmail	Mail delivery on a leg reversal, default `false`.	off
EnableSound	Sound playback on a leg reversal, default `false`.	off
SoundFile	Wav clip for the reversal alert, default `alert.wav`.	alert.wav

Settings that fit your chart

Swing legs need a market that turns rather than drifts. EURUSD H1 is the reference chart, where `InpDepth` at `6` picks swings lasting most of a session. On M5 the legs come fast and most divergences are tiny. On H4 each leg spans days and a mark is a genuine event.

When the Wave Reversal Indicator fails

Divergence marks disagreement, which a trend can produce repeatedly without turning.

The bias levels sit at 45 and 55, close enough to the middle that they block little.

Six bars of confirmation means every mark lands well after the swing itself.

Copy the compiled Wave Reversal Indicator file into your MQL4/Indicators folder, and the MT5 build into MQL5/Indicators, then restart the terminal and drag it onto a chart. The step-by-step guide with screenshots is at how to install MT4 and MT5 indicators.

Download the Wave Reversal Indicator for MT4 and MT5

The zip holds the compiled Wave Reversal Indicator build for MT4 and MT5, plus a short README. Compiled files only, no source. Enter your email below and the download link arrives in your inbox.

FAQ

How much does InpOversold at 45.0 block?

It stops a bullish divergence printing while the reading sits high. A buy needs the value below 45 at the swing. That level is close to the middle, so it blocks less than a stricter setting like 35 would.

How does the Wave Leg line get built?

From confirmed swings joined as sections. A swing needs `InpDepth` `6` bars on each side that fail to beat it. When a more extreme swing forms on the same side, it replaces the previous entry rather than adding one.

What does the Wave Buy divergence compare?

It compares the new swing against the previous same-side swing, on both price and the reading. A lower low with a higher reading is bullish disagreement. The sell case wants a higher high with a lower reading.

Why does InpMinBarsBetween exist?

Because swings can cluster during a choppy stretch, and each one may pass both tests. Five bars between same-side marks keeps a single wobble from producing three arrows that all describe the same thing.

Are results guaranteed?

No. Trading involves risk. Results are not guaranteed; past performance is not indicative of future results. Use the Wave Reversal Indicator as one input. Always backtest before trading live.