Mean Reversion Probability Zones [BigBeluga]

🔵 OVERVIEW
The Mean Reversion Probability Zones [BigBeluga] indicator measures the likelihood of price reverting back toward its mean. By analyzing oscillator dynamics (RSI, MFI, or Stochastic), it calculates probability zones both above and below the oscillator. These zones are visualized as histograms, colored regions on the main chart, and a compact dashboard, helping traders spot when the market is statistically stretched and more likely to revert.

🔵 CONCEPTS

• Mean Reversion: The tendency of price to return to its average after significant extensions.
  
• Oscillator-Based Analysis: Uses RSI, MFI, or Stochastic as the base signal for detecting overextension.
  
• Probability Model: The probability of reversion is computed using three factors:
  Whether the oscillator is rising or declining.
  Whether the oscillator is above or below user-defined thresholds.
  The oscillator’s actual value (distance from equilibrium).
  https://www.tradingview.com/x/csAwis1b/
• Dual-Zone Output:
  Upper histogram = probability of downward mean reversion.
  Lower histogram = probability of upward mean reversion.
  https://www.tradingview.com/x/S3RxyXQz/
• Historical Extremes: The dashboard highlights the recent maximum probability values for both upward and downward scenarios.
  

🔵 FEATURES

• Oscillator Choice: Switch between RSI, MFI, and Stochastic.
  
• Customizable Zones: User-defined upper/lower thresholds with independent colors.
  
• Probability Histograms:
  Above oscillator → down reversion probability.
  Below oscillator → up reversion probability.
  
• Colored Gradient Zones on Chart: Visual overlays showing where mean reversion probabilities are strongest.
  
• Probability Labels: Percentages displayed next to histogram values for clarity.
  
• Dashboard: Compact table in the corner showing the recent maximum probabilities for both upward and downward mean reversion.
  
• Overlay Compatibility: Works in both chart pane and sub-pane with oscillators.
  

🔵 HOW TO USE

• Set Oscillator: Choose RSI, MFI, or Stochastic depending on your strategy style.
  
• Adjust Zones: Define upper/lower bounds for when oscillator values indicate strong overbought/oversold conditions.
  
• Interpret Histograms:
  
• Orange (upper) histogram → higher chance of a pullback/downward mean reversion.
  
• Green (lower) histogram → higher chance of upward reversion/bounce.
  
• Watch Gradient Zones: On the main chart, shaded areas highlight where probability of mean reversion is elevated.
  
• Consult Dashboard: Use the “Recent MAX” values to understand how strong recent reversion probabilities have been in either direction.
  
• Confluence Strategy: Combine with support/resistance, order flow, or trend filters to avoid counter-trend trades.
  

🔵 CONCLUSION
The Mean Reversion Probability Zones [BigBeluga] provides traders with an advanced way to quantify and visualize mean reversion opportunities. By blending oscillator momentum, threshold logic, and probability calculations, it highlights when markets are statistically stretched and primed for reversal. Whether you are a contrarian trader or simply looking for exhaustion signals to fade, this tool helps bring structure and clarity to mean reversion setups.