FAQs

Mean Reversion Oscillator FAQs

What does the Mean Reversion Oscillator measure?

It measures the deviation of price from its moving average, scaled into a 0–100 range. High = stretched above mean; Low = stretched below mean.

Why does the oscillator sometimes stick at 0 or 100?

Because StdDev Length is too short compared to MA Length, volatility is underestimated. Fix: set StdDev Length equal to MA Length or increase it.

How should I set Overbought and Oversold levels?

• Default: 70/30 works broadly.

• Conservative: 80/20 for fewer, stronger signals.

• Aggressive: 60/40 for more frequent triggers.

Can MRO be used in trending markets?

Yes, but with a trend filter. Strong uptrends can keep MRO overbought for long periods. Use 200 EMA or HTF bias to avoid fading healthy trends.

Can the MRO be used to spot divergences?

• Bullish divergence: Price makes a lower low while MRO forms a higher low → possible reversal upward.

• Bearish divergence: Price makes a higher high while MRO forms a lower high → possible reversal downward. These signals are strongest when they align with support/resistance or higher timeframe context.

Yes. Divergences between price and the MRO can signal weakening momentum:

It’s designed for versatility and can be applied to stocks, forex, crypto, futures, and indices across any timeframe.