Personally using this indicator for some of my algo mean reversion strategies. Price reaching the extreme treshold (can be configured in settings, standard is 3) could be seen as a point where price will revert to the mean.
I've included alerts for when price crosses into extreme areas, as well as alerts for when crosses back into 'normal' territory again. Both are also plotted on the indicator through background coloring/shapes.
Since I've learned so much from other developers I've decided to open source the code. Let me know if you have any ideas on how to improve, I'll see if I can implement them.
- Updated to Pine v5
- Line now colors red/lime if Z-score is above/below treshold to increase visibility
In true TradingView spirit, the author of this script has published it open-source, so traders can understand and verify it. Cheers to the author! You may use it for free, but reuse of this code in a publication is governed by House Rules. You can favorite it to use it on a chart.