Enhanced Mean Reversion Signal System

We will introduce an Advanced Mean Reversion Detection module that generates additional high-probability reversal signals by identifying extreme oversold/overbought conditions through a proprietary multi-factor approach. The system would calculate a composite extremity score using

extremity_score = (rsi_component * 0.3 + rvfi_component * 0.3 + price_stretch * 0.4)

where each component is normalized to detect deviations from equilibrium. The RSI component would use adaptive thresholds that adjust based on recent volatility, with oversold levels dynamically set between 20-35 and overbought between 65-80 depending on

vol_score

. The RVFI component would identify extreme readings using percentile ranking over the adaptive lookback period, flagging conditions when RVFI falls below the 10th percentile (oversold) or above the 90th percentile (overbought).

The price stretch component would measure deviation from multiple moving averages, calculating

stretch_score = weighted_distance / adaptive_atr

where weighted_distance combines distances from the 20, 50, and 200-period EMAs with heavier weighting on shorter timeframes. The system would generate "R" (Reversal) signals when extremity_score exceeds 0.8 and momentum shows early signs of exhaustion (declining velocity in the direction of the trend), displayed as distinctive purple triangles above/below price bars. To prevent false signals, the module would require confirmation through a "exhaustion pattern" - three consecutive bars where price makes new extremes but momentum indicators (RVFI score, volume pressure) show divergence.

The feature would include an intelligent filtering system that suppresses reversal signals during strong trending markets (when

market_trend >= 3

) and enhances them during choppy conditions, with signal strength indicated by triangle size (larger = higher probability). The info table would add a new "REV" column showing the current extremity score (0-100) with color coding, helping traders identify when mean reversion conditions are building. This enhancement would complement the existing momentum signals, providing a complete trading system that captures both trend-following and mean-reversion opportunities while maintaining the indicator's strategic timeframe focus.