Mean Reversion Channel Screening with Smoothed Price and Range Bands
Summary
This screener applies a mean reversion channel calculation across a user-selected list of symbols and timeframe. It smooths a chosen price source using one of several filters, including SuperSmoother, Ehlers-style filters, and standard moving averages. A smoothed true range sets the channel width; the outer bands and extensions classify conditions as weak, normal, or strong overbought or oversold when the candle’s high or low reaches the relevant area relative to the mean line.
The script groups matching symbols into overbought and oversold lists and presents them in a chart label. Users can choose which signal strengths to screen and can supply as many as 40 symbols. These categories are indicator conditions, not standalone entry or exit rules, and the document gives no test results or evidence that extreme readings reverse. The smoothing choices, range multipliers, market, and timeframe can materially affect signals; readings may persist or worsen during strong trends.
Key ideas
- A smoothed price line and smoothed true range define the mean reversion channel and its width.
- Price extremes are classified into weak, normal, and strong overbought or oversold states.
- The screener requests the calculation for selected symbols at a chosen timeframe and lists matching conditions.
- Users can select among multiple smoothing filters and enable or disable signal-strength categories.
- Channel extremes indicate location relative to the model and do not establish that a reversal will follow.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.