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Meanreversion

Triple divergence of the weekly RSI on US Dollar Index Triple divergence of the weekly RSO in the US Dollar Index ahead of the US CPI and the FOMC points to a significant loss of upside momentum, we would allow for the possibility for the market to mean revert to its 20-week ma at 105.76. Disclaimer: The information posted on Trading View is for informative purposes and is not intended to constitute advice in any form, including but not limited to investment, accounting, tax, legal or regulatory advice. The information therefore has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient. Opinions expressed are our current opinions as of the date appearing on Trading View only. All illustrations, forecasts or hypothetical data are for illustrative purposes only. The Society of Technical Analysts Ltd does not make representation that the information provided is appropriate for use in all jurisdictions or by all Investors or other potential Investors. Parties are therefore responsible for compliance with applicable local laws and regulations. The Society of Technical Analysts will not be held liable for any loss or damage resulting directly or indirectly from the use of any information on this site.
ICEUS:DX1!Short
by The_STA
3
So Long and Thanks for all the FishI wasn’t able to do much charting and analysis this week. I'm taking a step back from charting the next few weeks as I finish a project. I wanted to get this last chart out that I have been working on for historical look at the vix. Why is the VIX so important? I would argue that the VIX is the most important indicator in a speculators arsenal. The vix is important because after a volatility event the vix will do what it does. Revert to Mean. To see this phenomenon in action all you have to do is a regression trend of VIX from ~2003 to pre-march 2020 to find the mean for VIX is 15.39 Next add another regression trend line sine the Covid 19 Spike and you will see that it took Oct 25 for the VIX event mean return to historical mean. So a speculator like me can conclude that the Crash of 2020 has completed its mean reversion. What was the cost you ask? To determine that, just extend the regression trend to now to find the current mean and WHAT THE HELL! A trend line formed from the completion of the mean reversion for covid to today and we see that the VIX Mean overall has now risin to 19.70. This is huge as a speculator because it gives us a variable to use in our analysis and some assumptions we can make to predicting a trend after an event. 1. When a crisis occurs, the government will step in to correct it with QE in some form. 2. After a large volatility event or even a bear market selloff, we can estimate an amount and time to reversion. Everyone has questioned why the Fed kept the peddle to the QE meddle. Well now you know why, to give the markets time to revert to mean. The bigger the spike, the more QE and/or time it will take to revert to mean. OK Then. Can the VIX predict a crash? I think it can and already is pointing to a near term event. If you compare the 08 GFC you will see 1 important trend of VIX since Jan 07 is a steady increase in volatility until the market eventually crashed. Unlike the March 2020 event which was spontaneous pop in VIX. Now you see, since mean reversion completed in Oct 25th, a steady increase in overall market volatility has taken hold. While the market still mean reverts after a bear leg selloff, that overall mean continues to rise. So How long before it pops? While 07-08 rise in volatility prior to its crash gives us some indication an event is imminent, it won’t be the same. I suspect it will be sooner and larger than anyone expects. If you look at 07-08s incline, It indicates we are knocking at the doorstep. It’s why I think VXX stopped issuing in March. It’s why we get such crazy market rallies in the middle of a “recession” and inverted yields. Everyone knows there is something wrong, the FED is waving their arms in the air like they just don't care. OK smart ass, then why won’t the markets crash. It’s because capital markets of today are much more reflexive than they were in the past. Since 2018, options began increasing in volume and popularity. Now, the dealers that sell those options, aka house the risk (or lack of risk) need to dynamically hedge their delta. When 1 dealer is offside from dealer 2, you can expect they will continuously hedge back and forth until…. They reach mean. This isn’t an overnight process and takes about 21 days in my estimation and is the VANNA and CHARM effects so prevalent in the markets over the past 2 years. It’s why there were such predicable dips every 19th during 2021. It’s why we got a huge bear rally this summer. (Volatility Compression). It’s why every golden cross has a death cross. It’s why moving averages provide hints to direction. OK, OK. This makes sense. But Why? Massive amounts of Delta hedging. I broke down one of the largest hedges wrapped around todays market equities and mapped out the strategies Delta graph. Delta is simple to understand and once you can visualize negative and positive delta you can extrapolate the zones of volatility. Once you map those zones to changes in volatility you have a good base to start marking assumptions. VIX Log Returns moving average. In the bottom panel I created a log return moving average that can give you a magnitude of movements. Ranked from 0-10 in increased volatility you can see that covid 19 moved the volatility scale the most in history with a 9.0 in the VIXTER SCALE. This scale can also move negative to -5 For each spike high there is always an equal push negative to bring volatility back to mean. With all this knowledge we can form a picture in our mind of a trampoline. The tension (or reflexivity) in the trampoline are the dealers pulling liquidity to their side. This includes all the hedge funds, market makers, bulls, bears, prop traders, theta gang, tsla gang, retail, institutions, etc are all pulling the trampoline tighter to their side. Each economical decision or crisis is going to launch VIX that much higher. That is until the trampoline breaks under the pressure. The FED saved banks and corporations after Covid with Stimulus, not the checks you got in the mail (those take time to trickle down to corporations), but the debt they were buying and adding to their balance sheet. That is a massive 9 Trillion dollars. That gave our trampoline the added support it needed to recover. What happens now when the FED puts that 9 Trillion in assets back into the market. The tension grows until the next crisis or event launches it to 10. Then it's... So long and thanks for all the Fish.
TVC:VIXLong
by SPYvsGME
7
Mean reversion buy on earnings crash of $LRN $LRN has been trading in a bullish channel for over a year now, and now is retesting the lower end of the channel's support. I'm entering a long position as the previous two candles were a doji and inverted hammer, both being strong signs of reversal. Additionally, at open, the stock gapped down below the lows on both the previous two candles, giving a good risk/reward ratio for this trade. I'm aiming to sell when the price crosses back to the moving average 50, for a small swing, but will cut my losses if the price falls below ~33.17, around where the previous trough's low was.
NYSE:LRNLong
by spiritualhealer117
$GPRO - Target 1 hit for +9% with further upside of +40% Technical Analysis (TA) Price is on the verge of testing resistance at Weekly 20EMA and daily 100EMA levels. This is Target 1 being hit. Once it breaks above we should see some consolidation as RSI is would hit the mid level but further upside to $9 is still well within reach as there is plenty of room before the RSI reach overbought levels around 70. However, this area could prove to be a key resistance zone so exercise caution.
NASDAQ:GPROLong
by subtlepapi
$FB - Bottomed out reversal play with +10% to 30% upsideTechnical Analysis Scenario 1 - Bullish Price has bottomed at $150 with a mean reversion play to $192-$230 depending on which resistance level holds above. Scenario 2 - Bearish The next few weeks will determine if we have a long entry above $170 (if price breaks above). If it resists at the $170 -$180 level then we have a continuation to $150 or a squeeze. Price Target Entry $170-$180 Target 1: $192 Target 2: $210 Target 3: $230
NASDAQ:METALong
by subtlepapi
$SPX - Relief rally might be over... back to under $4,000 soon? SPX has been experiencing a relief raly after the weekly and the daily charts were oversold however it has keey resistance levels are $4.2k and I expect to come back down as the ADX is still in the reset mode. Bearish Scenario Please be cautious as this rally might be short-lived. We might need to come back down to $3.6k and consolidate further before a full reversal. Bullish Scenario Even in a bullish scenario we still need the daily momentum indicators to drop down a bit and reset with price creating a new higher low/finding support around $4k. Once we climb above $4.2k with momentum from the weekly and the monthly timeframes we should have another bull cycle. However, this might take at least a few month or worst case in early 2023.
TVC:SPX
by subtlepapi
SOL long (spot) - mean reversion tradeVery simple: BTC looks to have bottomed (at least short term) and is showing life - looking to revert back to the 200-week MA. SOL is behaving as a strong beta play ever since the BTC bottom - if you take the time to review the exchange order flows... you'll see that an entity with a LOT of money is bidding SOL up. I'm not saying it's SBF / Alameda... but come on... I've bought spot: SOL @ $38.35 (mildly bullish position - given the macro environment) --> current sell target is $71.62
Long
by sarobinson2011
$APE bottom in? APE CHAIN?The next NFT frontier for the apes, APE CHAIN . Could $APE launch itself to compete w/ $BNB? It all depends on how heavily invested/serious they are in building an actual metaverse to reality. Looking at the founders of the coin, how $APE is now a payment currency on open sea , and how most metaverse projects are having trouble launching, I’m afraid $APE is a buy the rumor, sell the news type of coin for now. Would recommend getting on ape now at ~$17 Long based on speculation that other people will ape their $ to fund a potential leading metaverse project. Whether or not it delivers is irrelevant to making a profit given the strong community in the NFT space. More on the technicals: $APE looks like it might bottom out here around $17 from a bull div on the 2HR and moving away from a state of mean reversion since the high of $27. The BBWP indicator has yet to confirm the end of the volatile move but I speculate it will give consolidation soon as more APEs pause redeeming land deeds as they get sold out or wait for gas fees to come down to more reasonable levels. Once we get a rally, expect resistance at ~$20 The key points of confluence for the bottom: Wave 3 PoC 0.5 fib retracement of Wave 3 1.272 fib extension of Wave C of ABC pattern on Wave 4 The token distribution looks fair, though I would remain cautious of any possible scam wicks given how normie-friendly this coin is. If we break the $16.6 low, there is a 50/50 chance of visiting the white trend line at ~$12. Trade : Long Entry: $17.5 TP: $20, $24, $34, Delivery of Metaverse Project SL: $15
Long
by linebands
2
S&P 500 ---→ IN FOR A DEEP CORRECTION. MEAN REVERSION PENDING.S&P 500 IS IN FOR A DEEP CORRECTION. Monthly SPX Regression Channel, spanning 40 years, with bands of +4/-4 standard deviations. This is a long-term channel showing a Normal Distribution of SPX price occurrences. At least 95% of the price occurrences occurred within the Comfort Zone, the blue area between +2/-2 stdev as it should be. For 14 months (3.54% of the total bars) price has come out above the Comfort Zone, and even beyond +4 stdev. In an uptrend channel this type of action commands a Mean Reversion most of the time. Because this channel and its bands are dynamically calculated, the only alternative is for the price to stay out of the Comfort Zone until the channel adapts or accommodates (widens) to engulf the new prices, but in this case everything points to a MEAN REVERSION WITHIN THE NEXT 12 to 24 months. THEREFORE SPX IS GOING LOWER. Currently the Comfort Zone is between 3632 / 1818 Bear markets are not cleared up in a few days or weeks. They take time to unwind. Bear market rallies: Trade'm, but don't Trust'm We wrote an article about this channel on Feb-21-22
SP:SPXShort
by Point-Blank-Trading
Trading strategies you may not have seen, I will share with you Many classic indicators such as MACD, RSI, EMA are basically a combination of "iron triangle" equipped by hand. The more advanced ones may be candle pattern analysis and Elliott wave theory. Today we are going to talk about trading strategies based on volatility and linear regression, as well as correlation coefficients. These indicators are easy to create in Pine, and I will be creating a volatility correlation-based indicator to publish to my public script library in the near future. Trading strategies you may not have seen! Dry goods to share! Enough talk, please see the picture 1. In the linear regression in the chart, I draw the Pearson correlation coefficient with a yellow circle, which proves that 93.95% of the price falls within the standard deviation of the standard deviation band of the upper and lower 2 (you can refer to the standard deviation concept of Bollinger Band, //For a normal distribution, within one standard deviation of plus or minus is 68.2%, plus or minus two standard deviations is 95.4%, plus or minus three standard deviations is a 99.6% confidence interval//See statistics) 2. The indicator in the side graph is based on Close to Close's historical volatility percentage (great idea by @Balipour) and its SMA line, please note that the part larger than the SMA line we call "mean reversion", smaller than the SMA line part of it is called "trends", It can be seen that the price always fluctuates during "reversion to the mean", just like the volatility reading, the volatility is large but will eventually return to its *mean*, the part below the SMA is the "trend", which proves that the current market There is a "trend", which may be left or right trading, (the direction is clearly expressed in the linear regression) 3. The above two points can see whether the current market is "trend" or "mean reversion", then continue to look at the correlation coefficient in the sub-picture indicator. I will not repeat the principle. The source of the correlation coefficient is Close (close). price), the correlation is the historical volatility, 0 is the dividing line of the correlation coefficient, above 0 is a positive correlation, below 0 is a negative correlation, under a significant positive correlation, we describe the current market as a percentage of historical volatility is "mean reversion" It is still the fluctuation of the "trend" to operate. As can be seen in the figure, in the positive correlation fluctuation, we have captured a lot of trading signals. Finally, thanks to TV for such excellent and powerful chart analysis software
COINBASE:BTCUSDEducation
by Jeetl