OPEN-SOURCE SCRIPT
Mean Reversion Indicator — Buy the (DCA) Dip Signal (unbiased)
Description
The Mean Reversion Signal — Buy the Dip (unbiased) indicator is designed to detect high-probability reversion points within Bitcoin’s cyclical market structure. These signals only appear when momentum has either fully reset on the Stochastic RSI (SRSI) or when a positive momentum reversal is beginning to form.
It combines 6H Relative Strength Index (RSI) data with 2-Week Stochastic RSI (SRSI) dynamics to identify exhaustion and early accumulation phases.
Core logic:
A buy signal appears when the 6H RSI closes below 30, indicating local oversold conditions.
The 2W Stochastic RSI confirms momentum alignment when both K & D are below 20 (deep oversold), above 80 (strong ongoing rally), or when K crosses above D (positive reversal).
The indicator is cycle-aware — active only after a defined date (e.g., 2023-01-01) to ensure it aligns with current market structure and avoids noise from pre-cycle conditions.
Additionally, green signals from previous bull cycles (e.g., 2015, 2019, 2020) are also displayed to highlight historically similar accumulation phases, allowing for cross-cycle comparison.
Color zones:
🟩 High probability of a durable new rally
🟧 Moderate probability zone
🔴 Momentum already extended; potential continuation but weaker signal
Recommended combinations:
For a deeper confirmation framework, this signal pairs well with:
- CoinGlass: Derivatives Risk Index Chart (to assess market (de)leveraging and derivatives pressure)
- BTC Futures Sentiment Index (Axel Adler Jr.) — (to monitor directional sentiment shifts)
- CheckonChain: Bitcoin — Short-Term Holder SOPR (to track realized profit-taking activity)
- CheckonChain: Bitcoin — Short-Term Holder MVRV (to evaluate valuation risk relative to cost basis)
Use case:
This tool helps traders identify favorable mean-reversion opportunities while considering broader cycle context and momentum structure.
It is not financial advice — best used alongside macro structure analysis, derivatives positioning, and on-chain behavior for comprehensive decision-making.
The Mean Reversion Signal — Buy the Dip (unbiased) indicator is designed to detect high-probability reversion points within Bitcoin’s cyclical market structure. These signals only appear when momentum has either fully reset on the Stochastic RSI (SRSI) or when a positive momentum reversal is beginning to form.
It combines 6H Relative Strength Index (RSI) data with 2-Week Stochastic RSI (SRSI) dynamics to identify exhaustion and early accumulation phases.
Core logic:
A buy signal appears when the 6H RSI closes below 30, indicating local oversold conditions.
The 2W Stochastic RSI confirms momentum alignment when both K & D are below 20 (deep oversold), above 80 (strong ongoing rally), or when K crosses above D (positive reversal).
The indicator is cycle-aware — active only after a defined date (e.g., 2023-01-01) to ensure it aligns with current market structure and avoids noise from pre-cycle conditions.
Additionally, green signals from previous bull cycles (e.g., 2015, 2019, 2020) are also displayed to highlight historically similar accumulation phases, allowing for cross-cycle comparison.
Color zones:
🟩 High probability of a durable new rally
🟧 Moderate probability zone
🔴 Momentum already extended; potential continuation but weaker signal
Recommended combinations:
For a deeper confirmation framework, this signal pairs well with:
- CoinGlass: Derivatives Risk Index Chart (to assess market (de)leveraging and derivatives pressure)
- BTC Futures Sentiment Index (Axel Adler Jr.) — (to monitor directional sentiment shifts)
- CheckonChain: Bitcoin — Short-Term Holder SOPR (to track realized profit-taking activity)
- CheckonChain: Bitcoin — Short-Term Holder MVRV (to evaluate valuation risk relative to cost basis)
Use case:
This tool helps traders identify favorable mean-reversion opportunities while considering broader cycle context and momentum structure.
It is not financial advice — best used alongside macro structure analysis, derivatives positioning, and on-chain behavior for comprehensive decision-making.
Open-source script
In true TradingView spirit, the creator of this script has made it open-source, so that traders can review and verify its functionality. Kudos to the author! While you can use it for free, remember that republishing the code is subject to our House Rules.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Open-source script
In true TradingView spirit, the creator of this script has made it open-source, so that traders can review and verify its functionality. Kudos to the author! While you can use it for free, remember that republishing the code is subject to our House Rules.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.