Analyzing Oscillator Reversals with Price-and-Time Scatterplots

Summary

This indicator studies how price movement relates to the time between transitions into overbought and oversold conditions. It supports several oscillator inputs, including RSI, CCI, CMO, COG, MFI, ROC, or price, and defines dynamic thresholds using Bollinger Bands, Keltner Channels, or Donchian Channels. Each completed transition becomes a point: the horizontal coordinate represents price change, while the vertical coordinate records the number of bars, signed by transition direction.

The four graph quadrants distinguish whether price rose or fell during oversold-to-overbought and overbought-to-oversold moves. A scatterplot or heatmap groups observations into configurable buckets, and an outlier setting trims extremes when setting graph bounds. This makes the display a descriptive tool for examining oscillator behavior and price response across cycles. It does not establish predictive power or report a trading test; results depend on oscillator, band, bucket, and outlier choices, which can alter the presentation of the same observations.

Key ideas

• The indicator records price change and elapsed bars between alternating overbought and oversold transitions.
• Dynamic thresholds can be built from Bollinger, Keltner, or Donchian bands rather than fixed oscillator levels.
• Signed coordinates place each transition in a quadrant that distinguishes price direction and transition direction.
• Scatterplot and heatmap modes summarize the distribution, while bucket settings affect its visual form.
• Outlier trimming changes graph boundaries, and the document supplies no evidence that the patterns predict future returns.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.