OPEN-SOURCE SCRIPT
ADX + VIX / Mean Reversion or Trend
VIX + ADX · Zones — TradingView Description (Open Source)
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Indicator Title
**VIX + ADX · Mean Reversion & Market Regime**
Short tagline
*Two curves, one reading: know instantly when to fade the market or wait on the sidelines.*
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Description
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🧭 What This Indicator Does
This indicator overlays two pieces of information in a single pane:
- The **VIX** (CBOE Volatility Index) — the market's fear gauge, telling you *how much* volatility is priced into options
- The **ADX** (Average Directional Index) — the trend strength meter, telling you *how directional* price action currently is
Together, they define three clearly distinct trading regimes, each calling for a different approach.
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📊 Reading the Two Curves
#### 🔴🟠🟢 VIX Curve — Fear & Volatility
| Color | VIX Level | What It Means |
|---|---|---|
| 🟢 **Green** | < 20 | Low fear · Options implied vol is cheap · Market makers are neutral · Ideal conditions |
| 🟠 **Orange** | 20 – 30 | Rising fear · RISK OFF mode · Directional pressure building · Reduce exposure |
| 🔴 **Red** | > 30 | Panic · Volatility explosion · Gamma hedging amplifies moves · Survival mode |
Horizontal levels:
- `- - -` Orange dashed at **20** → RISK OFF threshold
- `───` Red solid at **30** → Panic threshold
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⚪🔵🔴 ADX Curve — Trend Strength
The ADX does **not** tell you whether the market goes up or down. It measures the **intensity** of movement in either direction.
| Color | ADX Level | What It Means |
|---|---|---|
| 🔵 **Blue** | < 20 | No trend · Pure range · Price is mean-reverting around equilibrium |
| ⚪ **White** | 20 – 40 | Trend building or fading · Transitional zone · Watch for direction |
| 🔴 **Red** | > 40 | Very strong trend · Momentum peak · Exhaustion / reversal setup forming |
**Black zone between 20 and 40** — the "Trend band" . When the ADX is inside this band, you are maybe in a trend condition.
🎯 The Two Core Strategies
This indicator is built around **Mean Reversion** in two distinct contexts:
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Strategy 1 — 📉 Mean Reversion from ADX Peak (ADX > 40)
When the ADX crosses **above 40**, the market has entered an extreme directional move. Historically, a high ADX reading signals **exhaustion**, not continuation. The trend has overextended.
**Setup:**
- ADX curve turns **red** (crosses above 40)
- Watch for the ADX to peak and begin rolling over (the curve starts declining)
- The turning point of the ADX = the moment momentum is dying
- This is your signal to **fade the move** and position for reversion to the mean
**Confirmation with VIX:**
- If VIX is green (< 20): ideal setup, vol is calm, the extension is likely mechanical → strong MR signal
- If VIX is orange (20–30): the move has fear behind it, wait for VIX to start declining before fading
- If VIX is red (> 30): do not fade yet — panic moves can extend far beyond rational levels
**Key rule:** don't fade the ADX on the way up. Wait for the **peak and rollover**. The red curve turning back toward white is your entry window.
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Strategy 2 — 📐 Mean Reversion in Range (ADX < 20)
When the ADX drops **below 20**, there is no meaningful trend. The market is oscillating around equilibrium. In this regime, **price respects key levels** — options strikes, gamma walls, Max Pain, support/resistance zones.
**Setup:**
- ADX curve turns **blue** (drops below 20)
- The market is in a defined range
- Key technical and options levels act as **price magnets**
- Fade the extremes: sell resistance, buy support, use options structures (credit spreads, iron condors, short straddles)
**Confirmation with VIX:**
- VIX **green** (< 20) + ADX **blue** (< 20) = **perfect alignment** · The cleanest mean-reversion environment possible · Options dealers are neutral · Gamma levels are sticky
- VIX **orange** (20–30) + ADX **blue** (< 20) = range trade still valid but reduce size · Vol is elevated, levels may be tested more aggressively
- VIX **red** (> 30) + ADX **blue** (< 20) = dangerous · Even in a range, a vol spike can trigger a sudden breakdown · Avoid range strategies, wait for VIX to settle
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🔁 Combined Signal Summary
| VIX | ADX | Regime | Strategy |
|---|---|---|---|
| 🟢 < 20 | 🔵 < 20 | ✅ **Perfect Range** | MR in range · Sell vol · Fade extremes · Trust options levels |
| 🟠 20-30 | 🔵 < 20 | 🟡 **Cautious Range** | Smaller size · Levels still matter but less reliable |
| 🟢 < 20 | ⚪ 20-40 | ⚠️ **Transition** | Wait · Trend trying to form or fade · No clean setup |
| 🟠 20-30 | ⚪ 20-40 | ⚠️ **Risk Off / Trending** | Reduce all exposure · Avoid new entries |
| Any | 🔴 > 40 peak + rolling | 🔄 **MR from Extreme** | Fade the exhaustion · Wait for ADX rollover confirmation |
| 🔴 > 30 | 🔴 > 40 | 🚨 **Panic / Flush** | Stand aside · No fading · Let it resolve |
📝 Important Notes
- The **VIX** is CBOE data (`VIX` symbol on TradingView). Most relevant for US equity-linked instruments: S&P 500, Nasdaq, and correlated assets. For other markets (forex, crypto, commodities), use VIX as a macro filter only.
- The **ADX** is calculated on the **active chart symbol and timeframe**. It adapts to any market.
- This indicator is a **regime filter**, not a signal generator. Use it to confirm or disqualify your existing setups — not to generate entries on its own.
- Recommended timeframes: works on all, but most actionable on **M5 to Daily**. On very short TF (< 5min), ADX is noisier.
🔓 Open Source
Free to use, fork, and improve. Share your improvements with the community.
Created by GuillaumeFly
---
---
Indicator Title
**VIX + ADX · Mean Reversion & Market Regime**
Short tagline
*Two curves, one reading: know instantly when to fade the market or wait on the sidelines.*
---
Description
---
🧭 What This Indicator Does
This indicator overlays two pieces of information in a single pane:
- The **VIX** (CBOE Volatility Index) — the market's fear gauge, telling you *how much* volatility is priced into options
- The **ADX** (Average Directional Index) — the trend strength meter, telling you *how directional* price action currently is
Together, they define three clearly distinct trading regimes, each calling for a different approach.
---
📊 Reading the Two Curves
#### 🔴🟠🟢 VIX Curve — Fear & Volatility
| Color | VIX Level | What It Means |
|---|---|---|
| 🟢 **Green** | < 20 | Low fear · Options implied vol is cheap · Market makers are neutral · Ideal conditions |
| 🟠 **Orange** | 20 – 30 | Rising fear · RISK OFF mode · Directional pressure building · Reduce exposure |
| 🔴 **Red** | > 30 | Panic · Volatility explosion · Gamma hedging amplifies moves · Survival mode |
Horizontal levels:
- `- - -` Orange dashed at **20** → RISK OFF threshold
- `───` Red solid at **30** → Panic threshold
---
⚪🔵🔴 ADX Curve — Trend Strength
The ADX does **not** tell you whether the market goes up or down. It measures the **intensity** of movement in either direction.
| Color | ADX Level | What It Means |
|---|---|---|
| 🔵 **Blue** | < 20 | No trend · Pure range · Price is mean-reverting around equilibrium |
| ⚪ **White** | 20 – 40 | Trend building or fading · Transitional zone · Watch for direction |
| 🔴 **Red** | > 40 | Very strong trend · Momentum peak · Exhaustion / reversal setup forming |
**Black zone between 20 and 40** — the "Trend band" . When the ADX is inside this band, you are maybe in a trend condition.
🎯 The Two Core Strategies
This indicator is built around **Mean Reversion** in two distinct contexts:
---
Strategy 1 — 📉 Mean Reversion from ADX Peak (ADX > 40)
When the ADX crosses **above 40**, the market has entered an extreme directional move. Historically, a high ADX reading signals **exhaustion**, not continuation. The trend has overextended.
**Setup:**
- ADX curve turns **red** (crosses above 40)
- Watch for the ADX to peak and begin rolling over (the curve starts declining)
- The turning point of the ADX = the moment momentum is dying
- This is your signal to **fade the move** and position for reversion to the mean
**Confirmation with VIX:**
- If VIX is green (< 20): ideal setup, vol is calm, the extension is likely mechanical → strong MR signal
- If VIX is orange (20–30): the move has fear behind it, wait for VIX to start declining before fading
- If VIX is red (> 30): do not fade yet — panic moves can extend far beyond rational levels
**Key rule:** don't fade the ADX on the way up. Wait for the **peak and rollover**. The red curve turning back toward white is your entry window.
---
Strategy 2 — 📐 Mean Reversion in Range (ADX < 20)
When the ADX drops **below 20**, there is no meaningful trend. The market is oscillating around equilibrium. In this regime, **price respects key levels** — options strikes, gamma walls, Max Pain, support/resistance zones.
**Setup:**
- ADX curve turns **blue** (drops below 20)
- The market is in a defined range
- Key technical and options levels act as **price magnets**
- Fade the extremes: sell resistance, buy support, use options structures (credit spreads, iron condors, short straddles)
**Confirmation with VIX:**
- VIX **green** (< 20) + ADX **blue** (< 20) = **perfect alignment** · The cleanest mean-reversion environment possible · Options dealers are neutral · Gamma levels are sticky
- VIX **orange** (20–30) + ADX **blue** (< 20) = range trade still valid but reduce size · Vol is elevated, levels may be tested more aggressively
- VIX **red** (> 30) + ADX **blue** (< 20) = dangerous · Even in a range, a vol spike can trigger a sudden breakdown · Avoid range strategies, wait for VIX to settle
---
🔁 Combined Signal Summary
| VIX | ADX | Regime | Strategy |
|---|---|---|---|
| 🟢 < 20 | 🔵 < 20 | ✅ **Perfect Range** | MR in range · Sell vol · Fade extremes · Trust options levels |
| 🟠 20-30 | 🔵 < 20 | 🟡 **Cautious Range** | Smaller size · Levels still matter but less reliable |
| 🟢 < 20 | ⚪ 20-40 | ⚠️ **Transition** | Wait · Trend trying to form or fade · No clean setup |
| 🟠 20-30 | ⚪ 20-40 | ⚠️ **Risk Off / Trending** | Reduce all exposure · Avoid new entries |
| Any | 🔴 > 40 peak + rolling | 🔄 **MR from Extreme** | Fade the exhaustion · Wait for ADX rollover confirmation |
| 🔴 > 30 | 🔴 > 40 | 🚨 **Panic / Flush** | Stand aside · No fading · Let it resolve |
📝 Important Notes
- The **VIX** is CBOE data (`VIX` symbol on TradingView). Most relevant for US equity-linked instruments: S&P 500, Nasdaq, and correlated assets. For other markets (forex, crypto, commodities), use VIX as a macro filter only.
- The **ADX** is calculated on the **active chart symbol and timeframe**. It adapts to any market.
- This indicator is a **regime filter**, not a signal generator. Use it to confirm or disqualify your existing setups — not to generate entries on its own.
- Recommended timeframes: works on all, but most actionable on **M5 to Daily**. On very short TF (< 5min), ADX is noisier.
🔓 Open Source
Free to use, fork, and improve. Share your improvements with the community.
Created by GuillaumeFly
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Mã nguồn mở
Theo đúng tinh thần TradingView, tác giả của tập lệnh này đã công bố nó dưới dạng mã nguồn mở, để các nhà giao dịch có thể xem xét và xác minh chức năng. Chúc mừng tác giả! Mặc dù bạn có thể sử dụng miễn phí, hãy nhớ rằng việc công bố lại mã phải tuân theo Nội quy.
Thông báo miễn trừ trách nhiệm
Thông tin và các ấn phẩm này không nhằm mục đích, và không cấu thành, lời khuyên hoặc khuyến nghị về tài chính, đầu tư, giao dịch hay các loại khác do TradingView cung cấp hoặc xác nhận. Đọc thêm tại Điều khoản Sử dụng.
Mã nguồn mở
Theo đúng tinh thần TradingView, tác giả của tập lệnh này đã công bố nó dưới dạng mã nguồn mở, để các nhà giao dịch có thể xem xét và xác minh chức năng. Chúc mừng tác giả! Mặc dù bạn có thể sử dụng miễn phí, hãy nhớ rằng việc công bố lại mã phải tuân theo Nội quy.
Thông báo miễn trừ trách nhiệm
Thông tin và các ấn phẩm này không nhằm mục đích, và không cấu thành, lời khuyên hoặc khuyến nghị về tài chính, đầu tư, giao dịch hay các loại khác do TradingView cung cấp hoặc xác nhận. Đọc thêm tại Điều khoản Sử dụng.