ADF For Gs

The ADF For Gs indicator implements the Augmented Dickey-Fuller (ADF) test, a statistical method commonly used to determine if a time series is mean-reverting or following a trend. By applying Moving Average (MA) smoothing, this indicator provides an adaptive way to detect market conditions where price action is either trending or reverting to a mean.

How It Works
- The ADF test statistic is calculated within a rolling window defined by the lookback period.
- The lag length is adjustable to account for serial correlation in price changes.
- The test statistic is compared to pre-defined threshold levels (upperEntry and lowerEntry) to identify potential trend breaks and reversals.
- Users can smooth the ADF values with different Moving Average types (SMA, EMA, VWMA, WMA, HMA, RMA), providing flexibility in signal interpretation.
- The indicator also includes dynamic bar and background coloring, visually enhancing trend and reversal conditions.

How to Use It
1. Trend vs. Mean Reversion:
(a) When the ADF statistic crosses above the upper threshold, it suggests a potential trend breakout.
(b) When it crosses below the lower threshold, it indicates a potential mean reversion.

2. Moving Average Smoothing:
(a) If useMA is enabled, the ADF values are smoothed using a selected MA type to filter noise.
(b) This allows for a more gradual trend-following approach.

3. Visual Cues:
(a) Background color changes to indicate bullish or bearish conditions.
(b) Candles are color-coded based on crossover signals to highlight entry/exit opportunities.

Default Settings & Recommended Usage
- Default period: 22 bars (4D timeframe recommended)
- MA smoothing enabled with a 23-length EMA
- Upper Entry level: -1.4 | Lower Entry level: -2.3
- Best used in trending markets to confirm breakout or mean reversion trades



Conclusion
The ADF For Gs indicator is designed to detect market trends and reversals by applying the Augmented Dickey-Fuller (ADF) test with Moving Average smoothing. By combining statistical validation with adaptive trend filtering, it helps traders separate meaningful price movements from temporary fluctuations. Whether used to confirm trends or identify mean-reversion opportunities, this tool provides a structured, data-driven approach to market analysis.

- Important Note: No trading indicator can predict future price movements with certainty. Historical performance does not guarantee future results.
- Best Practices: To get the most out of this indicator, traders should test different settings, validate signals with additional tools, and use proper risk management. Adjusting parameters to suit individual strategies can improve accuracy and overall effectiveness.