Premium Bands with Advanced Reversion System [nFinans]

📝 Description { Premium Bands with Advanced Reversion System [nFinans] }
Premium Bands is the result of 3 years of extensive research, backtesting, and optimization, designed to go beyond the limitations of standard Bollinger Bands or Keltner Channels.

While traditional bands often suffer from lag or produce too much noise in ranging markets, this script utilizes a dynamic volatility model based on WMA (Weighted Moving Average) and ATR (Average True Range) to minimize lag and identify high-probability reversal points.

1. Why is it Different? (The "Why")
Standard bands usually rely on Simple Moving Averages (SMA), which react slowly to price changes. Premium Bands was developed to solve specific issues identified over a 3-year study period:

Lag Reduction: By replacing the standard SMA with WMA, the bands adapt much faster to sudden trend changes and price spikes.

Dynamic Volatility: Instead of a fixed standard deviation, it uses an ATR-based expansion/contraction mechanism to handle market shocks more effectively.

Mean Reversion Logic: It doesn't just signal when price touches a band; it uses a custom oscillator logic to filter for the highest probability "return-to-center" moments.


(Image: General structure of Premium Bands showing trend tracking and volatility adaptation)

2. Technical Features & Signals
The script is optimized for visual clarity:

🚀 Reversion Signals (Arrows):

▲ Green Arrow: Appears when price tests the lower band and gains upward momentum (Bullish Mean Reversion).

▼ Red Arrow: Appears when price enters the upper band "overbought" zone and faces downward pressure (Bearish Rejection).


(Image: WMA-based smoothing allows for earlier detection of reversals compared to standard bands)

3. How to Use
This indicator can be used as a standalone system or combined with Price Action concepts.

Trend Following: Pay attention to the Mid Band color. If it is Green, the trend is bullish. If it is Red, the trend is bearish. The Mid Band acts as dynamic support/resistance.

Reversion Trading (Scalping): When price extends beyond the bands (+3 SD or -3 SD) and a reversal arrow appears, a trade back towards the Mid Band can be anticipated.


(Image: Reversal Line, earlier detection of reversals)

4. Settings
Lookback Period: Sets the calculation period (Default: 21).

Standard Deviation: Adjusts the channel width. We recommend 3 for volatile for crypto markets/stocks. and 2 for traditional forex

This script is published as Open Source to contribute to the community and simplify complex market structures. Your feedback is valuable for future updates.