Channel and zones
The mean-reversion channel every signal is built on. Mean line, inner and outer bands, zone edges.
The core of the indicator is a mean-reversion channel (MRC). The mean line is smoothed price; the bands are the smoothed true range laid out around it. Price breathes inside the channel, and the trips to its edges are where the counter-trend signals live.
How it's calculated
Smoothing is John Ehlers' SuperSmoother, a two-pole filter that's smoother than an EMA with almost no ringing. The mean line is the smoothed price source. The channel width comes from the bar's true range, smoothed over the same period.
Two bands sit symmetrically around the mean: the inner one (R1/S1) and the outer one (R2/S2). Their widths are set by the two band multipliers below. The signal zones are laid out around the outer band: the ultra-small zone on the inner band, the small zone inside the outer band, the central zone on it and the deep zone beyond it.
The outer band is the base of every zone. Move it and you move all the signal zones with it. The zone scale itself is explained on General.
Mean line
The price's balance point. It works two ways: as the magnet price tends to drift back to, and as a side filter, with buyers' territory above it and sellers' below. It has its own switch.
Settings
Group 📈 Channel and zones (MRC).
| Input | Default | What it does |
|---|---|---|
| Price source | hlc3 | The price the mean line is built from. The channel width always uses the true range and ignores this. |
| Channel period | 200 | Smoothing period of the mean and the range. Higher: a smoother, slower channel that price touches less often. |
| Inner band multiplier | 1.0 | Width of the inner band R1/S1. Also the ultra-small zone edge. |
| Outer band multiplier | 2.415 | Width of R2/S2. The base edge every zone is measured from. |
| Show channel | on | Shows all channel lines and zones. Signal logic doesn't depend on it. |
| Show mean line | on | Shows the gold mean line. |
| Show inner band | off | Shows R1/S1. No signal uses the inner band directly except through the ultra-small zone; it's a reference for the channel's normal range. |
Credits
The channel core is based on the open-source Mean Reversion Channel (fareid's MRI Variant) by fareidzulkifli, published on TradingView under MPL 2.0. The zones and everything built on them are Meanward's own code.