This indicator plots mean reversion (reversal) arrows with custom painted candles based on the price touch or close above or below keltner channel limits (upper & lower bands). This study was created primarily for swing trading & higher time frames such as daily and weekly. Lower time frames might result in more false signals.
Mean Reversal Arrows:
1. Reversal Arrow Up - If the price drops below the lower band extremes, reversal up is the trigger for a bullish mean reversion. 2. Reversal Arrow Down - Once the price reach the higher band extremes, reversal down is the trigger for a bearish mean reversion.
The Concept of Mean Reversion:
There are just two types of moves in any market: The market is either expanding from the mean or retracing back to the mean. These reversions & epxansions are happening across all types of markets. The goal of this study is to catch the powerful mean reversion from extremes back to the mean. Once the candles light up green / red, it is time to look for the reversal (purple) arrow which triggers the mean reversion setup. Mean reversion is not about catching the next big swing turn to new highs or lows. It is all about the base hits = the mean. So the target here is always the average price. The idea here is to catch the average market ebbs & flows, not the next home run.
What Do I Mean by Mean?
Mean is usually the average price from the last 20-30 bars. Basically something like a 20 MA or Keltner Channel or Bollinger Band midline are really good visual representators of the mean (average price).
Can you add more setting for the up bar? Maybe to increase sensitivity ty
mtahreemalam
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Yep something wrong with SignalUp, not showing at all
lnlcapital
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@mtahreemalam, well..this is weird, are you on a daily chart? there should be SignalUp on daily SPY on Jan 24th 22 as well as Feb 24th & Apr 25th and also one on Oct 13 (2022 lows), none of them are showing to you?
jash370
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there is something wrong with SignalUp. how to fix it?
lnlcapital
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@jash370, I reviewed the code once again & there is nothing wrong there. Although the SignalUp appear less often than SignalDown, the indicator seems to be working properly on my side. Perhaps try out different symbols or market products.