Mean Reversion

Overview
Uptrick: Mean Reversion is a technical indicator designed to identify statistically significant reversal opportunities by monitoring market extremes. It presents a unified view of multiple analytical layers—momentum shifts, extreme zones, divergence patterns, and a multi-factor bias dashboard—within a single pane. By translating price momentum into a normalized framework, it highlights areas where prices are likely to revert to their average range.

Introduction
Uptrick: Mean Reversion relies on several core concepts:

• Volatility normalization
  The indicator rescales recent market momentum into a common scale so that extreme readings can be interpreted consistently across different assets and timeframes.

• Mean reversion principle
  Markets often oscillate around an average level. When values stray too far beyond typical ranges, a return toward the mean is likely. Uptrick: Mean Reversion detects when these extremes occur.

• Momentum inflection
  Sharp changes in momentum direction frequently presage turning points. The indicator watches for shifts from upward momentum to downward momentum (and vice versa) to help time entries and exits.

• Divergence
  When price trends and internal momentum readings move in opposite directions, it can signal weakening momentum and an impending reversal. Uptrick: Mean Reversion flags such divergence conditions directly on the indicator pane.

• Multi-factor sentiment
  No single metric tells the entire story. By combining several independent sentiment measures—price structure, momentum, oscillators, and external market context—Uptrick: Mean Reversion offers a more balanced view of overall market bias.

Purpose
Uptrick: Mean Reversion was created for traders who focus on countertrend opportunities rather than simply following established trends. Its main objectives are:

• Spot extreme conditions
  By normalizing momentum into a standardized scale, the indicator clearly marks when the market is in overbought or oversold territory. These conditions often align with points where a snapback toward average is more probable.

• Provide reversal signals
  Built-in logic detects when momentum shifts direction within extreme zones and displays clear buy or sell markers to guide countertrend entries and exits.

• Highlight hidden divergences
  Divergence between price and internal momentum can suggest underlying weakness or strength ahead of actual price moves. Uptrick: Mean Reversion plots these divergences directly, allowing traders to anticipate reversals earlier.

• Offer contextual bias
  A dynamic dashboard aggregates multiple independent indicators—based on recent price action, momentum readings, common oscillators, and broader market context—to produce a single sentiment label. This helps traders determine whether mean reversion signals align with or contradict overall market conditions.

• Cater to lower timeframes
  Mean reversion tends to occur more frequently and reliably on shorter timeframes (for example, 5-minute, 15-minute, or 1-hour charts). Uptrick: Mean Reversion is optimized for these nimble environments, where rapid reversals can be captured before a larger trend takes hold.

Originality and Uniqueness
Uptrick: Mean Reversion stands out for several reasons:

• Proprietary normalization framework
  Instead of relying on raw oscillator values, it transforms momentum into a standardized scale. This ensures that extreme readings carry consistent meaning across different assets and volatility regimes.

• Inflection-based signals
  The indicator waits for a clear shift in momentum direction within extreme zones before plotting reversal markers. This approach reduces false signals compared to methods that rely solely on fixed threshold crossings.

• Embedded divergence logic
  Divergence detection is handled entirely within the same pane. Rather than requiring a separate indicator window, Uptrick: Mean Reversion identifies instances where price and internal momentum readings do not align and signals those setups directly on the chart.

• Adjustable sensitivity profiles
  Traders can choose from predefined risk profiles—ranging from very conservative to very aggressive—to automatically adjust how extreme a reading must be before triggering a signal. This customization helps balance between capturing only the most significant reversals or generating more frequent, smaller opportunities.

• Multi-factor bias dashboard
  While many indicators focus on a single metric, Uptrick: Mean Reversion aggregates five distinct sentiment measures. By balancing price-based bias, momentum conditions, and broader market context, it offers a more nuanced view of when to take—or avoid—countertrend trades.

Why Indicators Were Merged

• Proprietary momentum oscillator
  A custom-built oscillator rescales recent price movement into a normalized range. This core component underpins all signal logic and divergence checks, allowing extreme readings to be identified consistently.

• Inflection detection
  By comparing recent momentum values over a configurable lookback interval, the indicator identifies clear shifts from rising to falling momentum (and vice versa). These inflection points serve as a prerequisite for reversal signals when combined with extreme conditions.

• Divergence framework
  Local peaks and troughs are identified within the normalized oscillator and compared to corresponding price highs and lows. When momentum peaks fail to follow price to new extremes (or vice versa), a divergence alert appears, suggesting weakening momentum ahead of a price turn.

• Classic price bias
  Recent bar structures are examined to infer whether the immediate past price action was predominantly bullish, bearish, or neutral. This provides one piece of the overall sentiment picture.

• Smoothed oscillator bias
  A secondary oscillator reading is smoothed and compared to a central midpoint to generate a simple bullish or bearish reading.

• Range-based oscillator bias
  A familiar range-bound oscillator is used to detect oversold or overbought readings, contributing to the sentiment score.

• Classic momentum crossover bias
  A traditional momentum check confirms whether momentum currently leans bullish or bearish.

• External market trend bias
  The indicator monitors a major currency’s short-term trend to gauge broader market risk appetite. A falling currency—often associated with higher risk tolerance—contributes a bullish bias point, while a rising currency adds a bearish point.

All these elements run concurrently. Each piece provides a “vote” toward an overall sentiment reading. At the same time, the proprietary momentum oscillator drives both extreme-zone detection and divergence identification. By merging these inputs, the final result is a single pane showing both precise reversal signals and a unified market bias.

How It Works
At runtime, the indicator proceeds through the following conceptual steps:

• Read user inputs (risk profile, lookback index, visual mode, color scheme, background highlighting, bias table display, divergence toggles).

• Fetch the latest price data.

• Process recent price movement through a proprietary normalization engine to produce a single, standardized momentum reading for each bar.

• Track momentum over a configurable lookback interval to detect shifts in direction.

• Compare the current momentum reading to dynamically determined extreme thresholds (based on the chosen risk profile).

• If momentum has flipped from down to up within an oversold area, display a discrete buy marker. If momentum flips from up to down within an overbought area, display a sell marker.

• Identify local peaks and troughs in the proprietary momentum series and compare to price highs and lows over a configurable range. When divergence criteria are met, display bullish or bearish divergence labels

• Evaluate five independent sentiment measures—price bar bias, smoothed oscillator bias, range oscillator bias, traditional momentum crossover bias, and an external market trend bias—and assign each a +1 (bullish), –1 (bearish), or 0 (neutral) vote.

• Average the five votes to produce an overall sentiment score. If the average exceeds a positive threshold, label the bias as bullish; if it falls below a negative threshold, label it as bearish; otherwise label it neutral.

• Update the on-screen bias table at regular intervals, showing each individual metric’s value and vote, as well as the combined sentiment label.

• Apply color fills to highlight extreme zones in the background and draw horizontal guideline bands around those extremes.

• In complex visual mode, draw a cloud-like band that instantly changes color when momentum shifts. In simple mode, plot only a clean line of the normalized reading in a contrasting color.

• Expose alert triggers whenever a buy/sell signal, divergence confirmation, or bias flip occurs, for use in automated notifications.

Inputs
Here is how each input affects the indicator:

• Trading Style (very conservative / conservative / neutral / aggressive / very aggressive)
  Determines how sensitive the indicator is to extreme readings. Conservative settings require more pronounced market deviations before signaling a reversal; aggressive settings signal more frequently at smaller deviations.

• Slope Detection Index (integer)
  Controls how many bars back the indicator looks to compare momentum for inflection detection. Lower numbers respond more quickly but can be noisy; higher numbers smooth out short-term fluctuations.

• Visual Mode (simple / complex)
  Simple mode plots only the normalized momentum line, colored according to the chosen palette. Complex mode draws a candle-style block for each bar—showing the range of momentum movement within that bar—with colored fills that switch instantly when momentum direction changes.

• Color Scheme (multiple themes)
  Select from preset color palettes to style bullish vs. bearish elements (fills, lines, labels). Options include bright neon tones, classic contrasting pairs, dark-mode palettes, and more, ensuring signals stand out against any chart background.

• Enable Background Highlighting (true / false)
  When true, extreme overbought or oversold zones are shaded in a semi-transparent color behind the main pane. This helps traders “see” when the market is in a normalized extreme state without relying solely on lines or markers.

• Show Helper Scale Lines (true / false)
  When true, hidden horizontal lines force the vertical scale to include a fixed range of extreme values—even if the indicator rarely reaches them—so traders always know where the most extreme limits lie.

• Enable Divergence Detection (true / false)
  Toggles whether the script looks for divergences between price and the proprietary momentum reading. When enabled, bullish/bearish divergence markers appear automatically whenever defined conditions are met.

• Pivot Lookback Left & Pivot Lookback Right (integers)
  Define how many bars to the left and right the indicator examines when identifying a local peak or trough in the momentum reading. Adjust these to capture divergences on different swing lengths.

• Minimum and Maximum Bars Between Pivots (integers)
  Set the minimum and maximum number of bars allowed between two identified peaks or troughs for a valid divergence. This helps filter out insignificant or overly extended divergence patterns.

• Show Bias Table (true / false)
  When enabled, displays a small table in the upper-right corner summarizing five independent sentiment votes and the combined bias label. Disable to keep the pane focused on only the momentum series and signals.

Features
1. Extreme-zone highlighting
Overbought and oversold areas appear as colored backgrounds when the proprietary momentum reading crosses dynamically determined thresholds. This gives an immediate visual cue whenever the market moves into a highly extreme condition.

2. Discrete reversal markers
Whenever momentum shifts direction within an extreme zone, the indicator plots a concise “Buy” or “Sell” label directly on the normalized series. These signals combine both extreme-zone detection and inflection confirmation, reducing false triggers.

3. Dynamic divergence flags
Local peaks and troughs of the proprietary momentum reading are continuously compared to corresponding price points. Bullish divergence (momentum trough rising while price trough falls) and bearish divergence (momentum peak falling while price peak rises) are flagged with small labels and lines. These alerts help traders anticipate reversals before price charts show clear signals.

4. Multi-factor sentiment dashboard

• Five independent “votes” are tallied each bar:
  • Price bar bias (based on recent bar structure)
  • Smoothed oscillator bias (based on a popular momentum oscillator)
  • Range oscillator bias (based on an overbought/oversold oscillator)
  • Traditional momentum crossover bias (whether momentum is above or below its own smoothing)
  • External market trend bias (derived from a major currency index’s short-term trend)
  
  

• Each vote is +1 (bullish), –1 (bearish), or 0 (neutral). The average of these votes produces an overall sentiment label (Bullish, Bearish, or Neutral). The table updates periodically, showing each metric’s value, its vote, and the combined bias.
  
  
  

  

5. Versatile visual modes

• Simple mode: Plots a single normalized momentum line in a chosen color. Ideal for clean charts.

• Complex mode: Renders each bar’s momentum range as a candle-like block, with filled bodies that immediately change color when momentum direction flips. Edge lines emphasize the high/low range of momentum for that bar. This mode makes subtle momentum shifts visually striking.

6. Configurable sensitivity profiles
Five risk profiles (very conservative → very aggressive) automatically adjust how extreme the momentum reading must be before signaling. Conservative traders can wait for only the most dramatic reversals, while aggressive traders can capture more frequent, smaller mean-reversion moves.

7. Customizable color palettes
Twenty distinct color themes let users match the indicator to any chart background. Each theme defines separate colors for bullish fills, bearish fills, the momentum series, and divergence labels. Options range from classic contrasting pairs to neon-style palettes to dark-mode complements.

8. Unified plotting interface
Instead of scattering multiple indicators in separate panes, Uptrick: Mean Reversion consolidates everything—normalized momentum, background shading, threshold bands, reversal labels, divergence flags, and bias table—into a single indicator pane. This reduces screen clutter and places all relevant information in one view.

9. Built-in alert triggers
Six alert conditions are exposed:

• Mean reversion buy signal (momentum flips in oversold zone)

• Mean reversion sell signal (momentum flips in overbought zone)

• Bullish divergence confirmation

• Bearish divergence confirmation

• Bias flip to bullish (when combined sentiment shifts from non-bullish to bullish)

• Bias flip to bearish (when combined sentiment shifts from non-bearish to bearish)

Traders can attach alerts to any of these conditions to receive real-time notifications.

10. Scale anchoring
By forcing invisible horizontal lines at fixed extreme levels, the indicator ensures that the vertical axis always includes those extremes—even if the normalized reading rarely reaches them. This constant frame of reference helps traders judge how significant current readings are.

Line features:

Conclusion
Uptrick: Mean Reversion offers a layered, all-in-one approach to spotting countertrend opportunities. By converting price movement into a proprietary normalized momentum scale, it highlights extreme overbought and oversold zones. Inflection detection within those extremes produces clear reversal markers. Embedded divergence logic calls out hidden momentum weaknesses. A five-factor sentiment dashboard helps gauge whether a reversal signal aligns with broader market context. Users can tailor sensitivity, visual presentation, and color schemes, making it equally suitable for minimalist or richly detailed chart layouts. Optimized for lower timeframes, Uptrick: Mean Reversion helps traders anticipate statistically significant mean reversion moves.

Disclaimer
This indicator is provided for informational purposes only. It does not guarantee any trading outcome. Trading carries inherent risks, including the potential loss of invested capital. Users should perform their own due diligence, apply proper risk management, and consult a financial professional if needed. Past performance does not ensure future results.