Tactical Deviation

This indicator is a mean-reversion system grounded in statistical deviation from the Volume Weighted Average Price (VWAP). Unlike standard Bollinger Bands or static envelopes, the "Tactical Deviation" script integrates Multi-Timeframe Analysis, Dynamic Volatility Scaling, and Market Structure Validation to identify high-probability exhaustion points.

Underlying Concepts & Methodology

The core philosophy of this script is that price tends to revert to its volume-weighted mean after reaching statistical extremes. However, identifying true extremes requires more than just standard deviation. This script employs a three-layer validation filter:

Multi-Timeframe Confluence: The script calculates VWAP and Standard Deviation bands simultaneously for Daily, Weekly, and Monthly timeframes. It allows traders to visualize where short-term price action deviates significantly from longer-term volume trends. A key feature is the "Confluence Mode," which filters out noise by only flagging opportunities where price is overextended on multiple timeframes (e.g., Daily AND Weekly) simultaneously.
Dynamic Volatility Adjustment (Originality): Standard deviation bands are often too static. This script includes a "Dynamic Multiplier" algorithm that ingests Average True Range (ATR) data to adjust the band width.
Logic: Multiplier_Adjusted = Base_Multiplier * (1 + (ATR / Price * 10))
This ensures that during high-volatility events, the bands expand to prevent premature signals, while finding tighter entries during consolidation.
Structural & Volume Validation: Many mean-reversion indicators fail by "catching a falling knife." To mitigate this, this script does not signal solely on band touches. It requires two additional confirmations:
Pivot Confluence: The price must be interacting with a recent Swing Low (for longs) or Swing High (for shorts) specifically calculated within a user-defined lookback period.
Volume Injection: A signal is only valid if volume exceeds its moving average by a defined factor (default 1.5x) or shows significant momentum, confirming institutional participation at the reversal point.
Features & Settings

Deviation Clouds: Visualizes the 1σ-3σ zones with customizable transparency to highlight areas of statistical significance without cluttering the chart.
Signal Filter:
RSI Filter: Optional integration to ensure momentum is also overbought/oversold alongside price deviation.
Pivot Lookback: Adjusts the sensitivity of the market structure detection.
Info Panel: A dashboard displaying the current deviation (in Sigma) for all three monitored timeframes in real-time.
How to Use

This tool is designed for mean reversion trading.

Identify Extremes: Watch for price entering the outer deviation clouds (2σ or 3σ) on the Daily or Weekly VWAP.
Wait for Confirmation: Do not enter blindly on a band touch. Wait for the signal triangle, which confirms that Volume, RSI (if enabled), and Pivot Structure have aligned to suggest a probable reversal.
Risk Management: Use the VWAP itself (the center line) as a dynamic take-profit target, as price statistically gravitates back to this volume-weighted center.