RSI Extremes - Mean Reversion

// This Pine Script™ code is subject to the terms of the Mozilla Public License 2.0
// © TradingTools

//@version=5
strategy("RSI Extremes - Mean Reversion", overlay=true, default_qty_type=strategy.percent_of_equity, default_qty_value=100)

// ─── Inputs ───
rsiLength       = input.int(14, "RSI Length", group="RSI Settings")
rsiOverbought   = input.float(75, "Overbought Level", minval=50, maxval=95, group="RSI Settings")
rsiOversold     = input.float(25, "Oversold Level", minval=5, maxval=50, group="RSI Settings")
rsiExtremeOB    = input.float(85, "Extreme Overbought", minval=70, maxval=99, group="RSI Settings")
rsiExtremeOS    = input.float(15, "Extreme Oversold", minval=1, maxval=30, group="RSI Settings")
useDivergence   = input.bool(true, "Use RSI Divergence Confirmation", group="RSI Settings")
maLength        = input.int(200, "Trend Filter MA Length", group="Filters")
useTrendFilter  = input.bool(true, "Use Trend Filter (MA)", group="Filters")
atrLength       = input.int(14, "ATR Length", group="Risk Management")
atrMult         = input.float(2.0, "ATR Multiplier for SL", step=0.1, group="Risk Management")
rrRatio         = input.float(2.0, "Risk:Reward Ratio", step=0.1, group="Risk Management")

// ─── Calculations ───
rsiVal  = ta.rsi(close, rsiLength)
trendMA = ta.sma(close, maLength)
atrVal  = ta.atr(atrLength)

// ─── Divergence Detection ───
// Bullish divergence: price makes lower low but RSI makes higher low
priceLowerLow   = low < ta.lowest(low, 5)[1]
rsiHigherLow    = rsiVal > ta.valuewhen(priceLowerLow[1], rsiVal, 0)
bullDivergence  = priceLowerLow and rsiHigherLow and rsiVal < rsiOversold

// Bearish divergence: price makes higher high but RSI makes lower high
priceHigherHigh = high > ta.highest(high, 5)[1]
rsiLowerHigh    = rsiVal < ta.valuewhen(priceHigherHigh[1], rsiVal, 0)
bearDivergence  = priceHigherHigh and rsiLowerHigh and rsiVal > rsiOverbought

// ─── Entry Conditions ───
// Standard: RSI crosses back from extreme + optional trend filter + optional divergence
trendBullOK = useTrendFilter ? close > trendMA : true
trendBearOK = useTrendFilter ? close < trendMA : true

// RSI crossing back from oversold zone (mean reversion long)
rsiLongSignal  = ta.crossover(rsiVal, rsiOversold) or (rsiVal[1] <= rsiExtremeOS and rsiVal > rsiExtremeOS)
rsiShortSignal = ta.crossunder(rsiVal, rsiOverbought) or (rsiVal[1] >= rsiExtremeOB and rsiVal < rsiExtremeOB)

longCondition  = rsiLongSignal and (useDivergence ? bullDivergence or rsiVal[1] <= rsiExtremeOS : true)
shortCondition = rsiShortSignal and (useDivergence ? bearDivergence or rsiVal[1] >= rsiExtremeOB : true)

// ─── Execute Trades ───
if longCondition and strategy.position_size == 0
    sl = close - atrVal * atrMult
    tp = close + (close - sl) * rrRatio
    strategy.entry("RSI Long", strategy.long)
    strategy.exit("RSI Long Exit", "RSI Long", stop=sl, limit=tp)

if shortCondition and strategy.position_size == 0
    sl = close + atrVal * atrMult
    tp = close - (sl - close) * rrRatio
    strategy.entry("RSI Short", strategy.short)
    strategy.exit("RSI Short Exit", "RSI Short", stop=sl, limit=tp)

// ─── RSI Panel ───
var rsiPanel = "RSI Panel"
hline(rsiOverbought, "Overbought", color=color.red, linestyle=hline.style_dashed, display=display.none)
hline(rsiOversold, "Oversold", color=color.green, linestyle=hline.style_dashed, display=display.none)
hline(50, "Midline", color=color.gray, linestyle=hline.style_dotted, display=display.none)

// ─── Overlay Plotting ───
plot(useTrendFilter ? trendMA : na, "Trend MA", color=color.new(color.gray, 30), linewidth=2)

plotshape(longCondition, title="Long Signal", location=location.belowbar, style=shape.diamond, color=color.green, size=size.small, text="RSI")
plotshape(shortCondition, title="Short Signal", location=location.abovebar, style=shape.diamond, color=color.red, size=size.small, text="RSI")

// ─── Background on Extreme RSI ───
bgcolor(rsiVal >= rsiExtremeOB ? color.new(color.red, 85) : rsiVal <= rsiExtremeOS ? color.new(color.green, 85) : na, title="Extreme RSI Zone")

// ─── Alerts ───
alertcondition(longCondition, title="RSI Extreme Long", message="RSI Extremes: Oversold reversal detected — Long entry")
alertcondition(shortCondition, title="RSI Extreme Short", message="RSI Extremes: Overbought reversal detected — Short entry")