Quantum Flux Bands

The Quantum Flux Bands indicator provides an institutional-grade regime detection system that identifies market shifts by stationarizing price series through fractional differentiation and CUSUM testing. It aims to offer traders a statistically robust framework for determining trend direction, volatility-adjusted support/resistance, and regime stability.

Usage

The Usage section describes how the script can be used to navigate different market environments. The tool produces a baseline that represents the current "fair value" for the detected regime, surrounded by entropy-modulated bands.

• Mean-Reversion: In stable regimes (identified by low entropy and mean-reverting Hurst estimates), traders can use the outer bands as statistical exhaustion points for fade entries.
• Trend Continuation: When a regime shift occurs (the baseline "snaps"), the first retest of the inner bands often serves as a high-probability entry point for following the new trend.
• Confidence Filtering: The "Bull Probability" label provides a live confidence score. Levels above 70% or below 30% indicate high-conviction bullish or bearish states, respectively.
• Volatility Management: The bands expand and contract based on Shannon entropy. Wide bands signal low signal-to-noise ratios (requiring wider stops), while tight bands indicate high conviction and cleaner price action.

Details

The script utilizes Fixed-Window Fractional Differentiation (FFD) to make price series stationary while preserving long-memory characteristics. Unlike standard first-difference filters, it adaptively chooses a differentiation order ($d$) based on a rolling Hurst estimate. This ensures the stationarity required for the CUSUM (Cumulative Sum) change-point test is maintained without losing vital historical context.

The envelopes are not standard deviations but are derived from percentile linear interpolation of the absolute distance between price and the baseline. These are further modulated by a windowed Shannon entropy estimator, which measures the complexity of the price distribution to adjust band width dynamically.

Settings

Fractional Differentiation & CUSUM

• FFD Window Length: The number of historical bars used for the fractional differentiation memory.
• CUSUM Volatility Period: The lookback for the rolling standard deviation used to normalize CUSUM deviations.
• CUSUM Drift (k): A noise filter parameter; higher values require stronger price moves to trigger a regime shift.
• CUSUM Threshold (h): The sensitivity of the baseline; defines how many standard deviations the cumulative sum must reach before snapping to a new price.

Regime & Bands

• Hurst Lookbacks (Short/Long): Settings for the two-point R/S estimator that drives the adaptive $d$ value.
• Entropy Settings: Controls for the Shannon entropy estimator, including the window size, histogram bins, and Z-score length for normalization.
• Percentile Lookback: The window used to calculate the distance for the inner (50%), mid (68%), and outer (90%) envelopes.

Visuals & Labels

• Colors: Customizable options for bullish, bearish, and "Quantum" accent colors.
• Display Toggles: Toggles for band visibility, iridescent candles, regime pulses, and the probability label.
• Event Labels: Controls for displaying regime-shift timelines, baseline reclaims, and outer band touch/rejection markers, including minimum spacing to prevent label overlap.
• Dashboard: Adjustments for the position and text size of the information panel.

FAQ

How do I interpret the "Bull Probability" label? The label represents a standard-normal Cumulative Distribution Function (CDF) calculation based on the distance between price and the baseline. It provides a continuous 0–100% scale of bullish vs. bearish conviction.

Why do the bands change thickness suddenly? The bands are modulated by Shannon entropy. If the market becomes "noisy" or unpredictable, entropy increases and the bands expand. Conversely, when price action becomes orderly, entropy drops and the bands contract.

How can I access this tool? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.