Fibonacci Entry Bands [AlgoAlpha]

OVERVIEW

This script plots Fibonacci Entry Bands, a trend-following and mean-reversion hybrid system built around dynamic volatility-adjusted bands scaled using key Fibonacci levels. It calculates a smoothed basis line and overlays multiple bands at fixed Fibonacci multipliers of either ATR or standard deviation. Depending on the trend direction, specific upper or lower bands become active, offering a clear framework for entry timing, trend identification, and profit-taking zones.

CONCEPTS

The core idea is to use Fibonacci levels—0.618, 1.0, 1.618, and 2.618—as multipliers on a volatility measure to form layered price bands around a trend-following moving average. Trends are defined by whether the basis is rising or falling. The trend determines which side of the bands is emphasized: upper bands for downtrends, lower bands for uptrends. This approach captures both directional bias and extreme price extensions. Take-profit logic is built in via crossovers relative to the outermost bands, scaled by user-selected aggressiveness.

FEATURES

1. Basis Line – A double EMA smoothing of the source defines trend direction and acts as the central mean.
   
2. Volatility Bands – Four levels per side (based on selected ATR or stdev) mark the Fibonacci bands. These become visible only when trend direction matches the side (e.g., only lower bands plot in an uptrend).
   
3. Bar Coloring – Bars are shaded with adjustable transparency depending on distance from the basis, with color intensity helping gauge overextension.
   
4. Entry Arrows – A trend shift triggers either a long or short signal, with a marker at the outermost band with ▲/▼ signs.
   
5. Take-Profit Crosses – If price rejects near the outer band (based on aggressiveness setting), a cross appears marking potential profit-taking.
   
6. Bounce Signals – Minor pullbacks that respect the basis line are marked with triangle arrows, hinting at continuation setups.
   
7. Customization – Users can toggle bar coloring, signal markers, and select between ATR/stdev as well as take-profit aggressiveness.
   
   
8. Alerts – All major signals, including entries, take-profits, and bounces, are available as alert conditions.
   

USAGE

To use this tool, load it on your chart, adjust the inputs for volatility method and aggressiveness, and wait for entries to form on trend changes. Use TP crosses and bounce arrows as potential exit or scale-in signals.