price action reversion bands - [SigmaStreet]

30 Apr

█ OVERVIEW

The "Price Action Reversion Bands" is designed to help traders identify potential reversal zones through the integration of polynomial regression, fractal analysis, and pinbar detection. This tool overlays directly onto the price chart, providing dynamic visual cues and signals for market reversals. Its unique synthesis of these methodologies offers traders a powerful, multifaceted approach to market analysis.



█ CONCEPTS

Polynomial Regression Bands:

What It Does:
Models the main trend using a polynomial equation to create a middle trend line with dynamic support and resistance bands.
How It Works:
Calculates polynomial coefficients to plot a regression line and adjusts the bands according to market volatility and conditions.
Fibonacci Retracement Levels:

What It Does:
Provides additional lines inside the regression bands at key Fibonacci ratios to identify potential support and resistance areas.
How It Works:
Calculates retracement levels by identifying high and low points over the same period used to calculate the regression bands, applying Fibonacci ratios to these points.

Fractal Analysis:

What It Does: Identifies natural resistance and support levels, indicating potential reversal zones.
How It Works: Detects fractals based on a specific pattern of price action, using Williams Fractal methodology.

Pinbar Detection:

What It Does: Signals potential price reversals through pinbar candlestick patterns.
How It Works: Analyzes
candlesticks to identify pinbars which show a rejection of prices, suggesting possible reversals.

█ ORIGINALITY AND USEFULNESS

The price action reversion bands distinguishes itself through its innovative integration of several advanced analytical methods, providing traders with a holistic view of potential market reversals:

Unique Combination:

While many tools use these techniques in isolation, this indicator synergistically combines polynomial regression, Fibonacci retracement levels, fractal analysis, and pinbar detection. This multi-faceted approach allows traders to assess strength, potential reversal zones, and price rejection more effectively than using traditional single-method indicators.

Advanced Polynomial Regression Application:

Unlike standard regression tools that offer static insights, this indicator dynamically adjusts its regression bands based on real-time market volatility, providing a more accurate reflection of market conditions.

Enhanced Signal Reliability:

By using fractals and pinbars in conjunction to validate each other, the indicator significantly increases the reliability of its reversal signals. This dual-validation method filters out less probable signals, focusing on high-probability trading opportunities.

Customization and Flexibility:

It offers unprecedented customization options, allowing traders to fine-tune the tool according to their trading style and market conditions. Traders can adjust the polynomial degree, the sensitivity of the Fibonacci retracements, and even the definition of what constitutes a significant pinbar, making it highly adaptable to various trading scenarios.

Educational Value:

The indicator not only aids in trading but also serves as an educational tool that helps traders understand the interaction between different types of market analysis techniques. This contributes to a deeper knowledge base and better trading decisions over time.
These distinctive features make the "Price Action Reversion Bands - [SigmaStreet]" not just another indicator but a comprehensive trading tool that enhances decision-making through a well-rounded analysis of market dynamics.



█ HOW TO USE

Installation and Setup:

Apply the indicator to your TradingView chart from the "Indicators" menu.
Select either polynomial regression or Fibonacci retracement as the basis for the bands through the indicator settings.
Reading the Indicator:

Monitor the approach of price to the upper and lower bands which indicate potential reversal zones.
Look for fractal and pinbar formations near these bands for additional signal confirmation.
Customization:

Adjust settings such as the polynomial degree, data window length, and engagement zones to tailor the bands to your trading style.
Modify visual aspects like color and line type for better clarity and personal preference.



█ FEATURES

Dynamic Adjustment:

Bands adjust in real-time based on incoming price data and selected settings.
Multiple Analysis Techniques: Combines several analytical techniques to provide a comprehensive view of potential market movements. The integration of polynomial regression with Fibonacci levels, supplemented by fractal and pinbar analysis, marks this tool as particularly innovative, offering a level of synthesis that enhances predictive accuracy and usability.
User-Friendly Customization: Allows for extensive customization to suit individual trading strategies and preferences.

█ LIMITATIONS

Market Dependency:

Performance may vary significantly across different markets and conditions.
Parameter Sensitivity: Requires fine-tuning of parameters to ensure optimal performance, which might demand a steep learning curve for new users.

█ NOTES

For best results, combine this tool with other forms of analysis, such as fundamental analysis and other technical indicators, to confirm signals and enhance decision-making.

█ THANKS

Special thanks to the PineCoders community the Pine Coders themselves for their foundational contributions to the concepts used in this script. Their pioneering work in the fields of technical analysis and Pine Script development has been invaluable. This script is a testament to the collaborative spirit of the TradingView developer community, integrating analytical techniques with innovative approaches to offer a tool that is both modern and cutting-edge.

8 Agu

Catatan Rilis

On Request, I've updated the logic for the bull and bear signals .

Bullish 3 Candle Reversal Type #1
This pattern indicates a potential reversal from a downtrend to an uptrend and consists of the following conditions:

Candle 1 (Bearish):
The first candle in the pattern is bearish, meaning the close price is lower than the open price (bear = close < open).

Candle 2 (Continuation Bearish):
The second candle has a lower low and a lower high compared to the first candle, signaling a continuation of the bearish trend.
Additionally, the maximum of the second candle’s open and close is lower than the maximum of the first candle’s open and close, reinforcing the bearish sentiment.

Candle 3 (Bullish Reversal):
The third candle has a higher low than the second candle, indicating that selling pressure is weakening.
The third candle’s close price is higher than the open price of the first candle, showing a potential reversal.
The high of the third candle is also higher than the high of the first candle, confirming a bullish reversal.

Bearish 3 Candle Reversal Type #1
This pattern suggests a potential reversal from an uptrend to a downtrend and consists of the following conditions:

Candle 1 (Bullish):
The first candle in the pattern is bullish, where the close price is higher than the open price (bull = close > open).

Candle 2 (Continuation Bullish):
The second candle has a higher low and a higher high compared to the first candle, indicating a continuation of the bullish trend.
The minimum of the second candle’s open and close is higher than the minimum of the first candle’s open and close, confirming the bullish momentum.

Candle 3 (Bearish Reversal):
The third candle has a lower high than the second candle, signaling that buying pressure is weakening.
The third candle’s close price is lower than the open price of the first candle, indicating a potential reversal.
The low of the third candle is also lower than the low of the first candle, confirming a bearish reversal.

Bullish 3 Candle Reversal Type #2
This pattern indicates another potential reversal from a downtrend to an uptrend and consists of the following conditions:

Candle 1 (Bearish):
The first candle in this pattern is bearish (bear = close < open).

Candle 2 (Bullish Reversal Start):
The second candle is bullish, meaning the close price is higher than the open price.
The low of the second candle is lower than the low of the first candle, but the close is above the high of the first candle, showing a strong bullish reversal.

Candle 3 (Bullish Continuation):
The third candle is also bullish, with a low higher than the second candle’s low, confirming that the bullish momentum is continuing.
The close of the third candle is above the highest close of the previous two candles, reinforcing the uptrend.
Bearish 3 Candle Reversal Type #2
This pattern suggests another potential reversal from an uptrend to a downtrend and consists of the following conditions:

Candle 1 (Bullish):
The first candle in this pattern is bullish (bull = close > open).

Candle 2 (Bearish Reversal Start):
The second candle is bearish, with the high above the high of the first candle, but the close is below the low of the first candle, showing a strong bearish reversal.

Candle 3 (Bearish Continuation):
The third candle is also bearish, with a high lower than the second candle’s high, confirming that the bearish momentum is continuing.
The close of the third candle is below the lowest close of the previous two candles, reinforcing the downtrend.

#1 RSI filtering
"Overbought and Oversold"
Users can choose this RSI filter to only see bear signals when the RSI is above the overbought value (default is 70) and only see bull signals when the RSI is below the oversold value (default is 30)
"Momentum"
"Overbought and Oversold"
Users can choose this RSI filter to only see bear signals when the RSI is below 50, and only see bull signals when the RSI is above 50

CONCLUSION:
All updates aim to eliminate "false signals" and provide users with a more customizable indicator.