Neural Pulse System [Alpha Extract]

Neural Pulse System (NPS)

The Neural Pulse System (NPS) is a custom technical indicator that analyzes price action through a probabilistic lens, offering a dynamic view of bullish and bearish tendencies.
Unlike traditional binary classification models, NPS employs Ordinary Least Squares (OLS) regression with dynamically computed coefficients to produce a smooth probability output ranging from -1 to 1.
Paired with ATR-based bands, this indicator provides an intuitive and volatility-aware approach to trend analysis.

🔶 CALCULATION
The Neural Pulse System utilizes OLS regression to compute probabilities of bullish or bearish price action while incorporating ATR-based bands for volatility context:

• Dynamic Coefficients: Coefficients are recalculated in real-time and scaled up to ensure the regression adapts to evolving market conditions.
  
• Ordinary Least Squares (OLS): Uses OLS regression instead of gradient descent for more precise and efficient coefficient estimation.
  
• ATR Bands: Smoothed Average True Range (ATR) bands serve as dynamic boundaries, framing the regression within market volatility.
  
• Probability Output: Instead of a binary result, the output is a continuous probability curve (-1 to 1), helping traders gauge the strength of bullish or bearish momentum.
  

Formula:

OLS Regression = Line of best fit minimizing squared errors
Probability Signal = Transformed regression output scaled to -1 (bearish) to 1 (bullish)
ATR Bands = Smoothed Average True Range (ATR) to frame price movements within market volatility

🔶 DETAILS

📊 Visual Features:

Probability Curve: Smooth probability signal ranging from -1 (bearish) to 1 (bullish)
ATR Bands: Price action is constrained within volatility bands, preventing extreme deviations
Color-Coded Signals:
Blue to Green: Increasing probability of bullish momentum
Orange to Red: Increasing probability of bearish momentum
Interpretation:
Bullish Bias: Probability output consistently above 0 suggests a bullish trend.
Bearish Bias: Probability output consistently below 0 indicates bearish pressure.
Reversals: Extreme values near -1 or 1, followed by a move toward 0, may signal potential trend reversals.

🔶 EXAMPLES

📌 Trend Identification: Use the probability output to gauge trend direction.

📌Example: On a 1-hour chart, NPS moves from -0.5 to 0.8 as price breaks resistance, signaling a bullish trend.

Reversal Signals: Watch for probability extremes near -1 or 1 followed by a reversal toward 0.

Example: NPS hits 0.9, price touches the upper ATR band, then both retreat—indicating a potential pullback.

📌 Example snapshots:





Volatility Context: ATR bands help assess whether price action aligns with typical market conditions.

Example: During low volatility, the probability signal hovers near 0, and ATR bands tighten, suggesting a potential breakout.

🔶 SETTINGS
Customization Options:

• ATR Period – Defines lookback length for ATR calculation (shorter = more responsive, longer = smoother).
  
• ATR Multiplier – Adjusts band width for better volatility capture.
  
• Regression Length – Controls how many bars feed into the coefficient calculation (longer = smoother, shorter = more reactive).
  
• Scaling Factor – Adjusts the strength of regression coefficients.
  
• Output Smoothing – Option to apply a moving average for a cleaner probability curve