Adaptive Fibonacci Volatility Bands (AFVB)

**Adaptive Fibonacci Volatility Bands (AFVB)**
### **Overview**
The **Adaptive Fibonacci Volatility Bands (AFVB)** indicator enhances standard **Fibonacci retracement levels** by dynamically adjusting them based on market **volatility**. By incorporating **ATR (Average True Range) adjustments**, this indicator refines key **support and resistance zones**, helping traders identify **more reliable entry and exit points**.

**Key Features:**
- **ATR-based adaptive Fibonacci levels** that adjust to changing market volatility.
- **Buy and Sell signals** based on price interactions with dynamic support/resistance.
- **Toggleable confirmation filter** for refining trade signals.
- **Customizable color schemes** and alerts.

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## **How This Indicator Works**
The **AFVB** operates in three main steps:

### **1️⃣ Detecting Key Fibonacci Levels**
The script calculates **swing highs and swing lows** using a user-defined lookback period. From this, it derives **Fibonacci retracement levels**:
- **0% (High)**
- **23.6%**
- **38.2%**
- **50% (Mid-Level)**
- **61.8%**
- **78.6%**
- **100% (Low)**

### **2️⃣ Adjusting for Market Volatility**
Instead of using **fixed retracement levels**, this indicator incorporates an **ATR-based adjustment**:
- **Resistance levels** shift **upward** based on ATR.
- **Support levels** shift **downward** based on ATR.
- This makes levels more **responsive** to price action.

### **3️⃣ Generating Buy & Sell Signals**
AFVB provides **two types of signals** based on price interactions with key levels:

✔ **Buy Signal**:
Occurs when price **dips below** a support level (78.6% or 100%) and **then closes back above it**.
- **Optionally**, a confirmation buffer can be enabled to require price to close **above an additional threshold** (based on ATR).

✔ **Sell Signal**:
Triggered when price **breaks above a resistance level** (0% or 23.6%) and **then closes below it**.

📌 **Important:**
- The **buy threshold setting** allows traders to **fine-tune** entry conditions.
- Turning this setting **off** generates **more frequent** buy signals.
- Keeping it **on** reduces false signals but may result in **fewer trade opportunities**.

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## **How to Use This Indicator in Trading**
### 🔹 **Entry Strategy (Buying)**
1️⃣ Look for **buy signals** at the **78.6% or 100% Fibonacci levels**.
2️⃣ Ensure price **closes above** the support level before entering a long trade.
3️⃣ **Enable or disable** the buy threshold filter depending on desired trade strictness.

### 🔹 **Exit Strategy (Selling)**
1️⃣ Watch for **sell signals** at the **0% or 23.6% Fibonacci levels**.
2️⃣ If price **breaks above resistance and then closes below**, consider exiting long positions.
3️⃣ Can be used **alone** or **combined with trend confirmation tools** (e.g., moving averages, RSI).

### 🔹 **Using the Toggleable Buy Threshold**
- **ON**: Buy signal requires **extra confirmation** (reduces false signals but fewer trades).
- **OFF**: Buy triggers as soon as price **closes back above support** (more signals, but may include weaker setups).

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## **User Inputs**
### **🔧 Customization Options**
- **ATR Length**: Defines the period for **ATR calculation**.
- **Swing Lookback**: Determines how far back to find **swing highs and lows**.
- **ATR Multiplier**: Adjusts the size of **volatility-based modifications**.
- **Buy/Sell Threshold Factor**: Fine-tunes the **entry signal strictness**.
- **Show Level Labels**: Enables/disables **Fibonacci level annotations**.
- **Color Settings**: Customize **support/resistance colors**.

### **📢 Alerts**
AFVB includes built-in **alert conditions** for:
- **Buy Signals** ("AFVB BUY SIGNAL - Possible reversal at support")
- **Sell Signals** ("AFVB SELL SIGNAL - Possible reversal at resistance")
- **Any Signal Triggered** (Useful for automated alerts)

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## **Who Is This Indicator For?**
✅ **Scalpers & Day Traders** – Helps identify **short-term reversals**.
✅ **Swing Traders** – Useful for **buying dips** and **selling rallies**.
✅ **Trend Traders** – Can be combined with **momentum indicators** for confirmation.

**Best Timeframes:**
⏳ **15-minute, 1-hour, 4-hour, Daily charts** (works across multiple assets).

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## **Limitations & Considerations**
🚨 **Important Notes**:
- **No indicator guarantees profits**. Always **combine** it with **risk management strategies**.
- Works best **in trending & mean-reverting markets**—may generate false signals in **choppy conditions**.
- Performance may vary across **different assets & timeframes**.

📢 **Backtesting is recommended** before using it for live trading.