RSI + WVF Confluence [Multi-Stage]

Overview
The RSI + WVF Confluence is a sophisticated reversal indicator that merges momentum analysis with market volatility. By combining a "hooking" Relative Strength Index (RSI) with a synthetic Williams VIX Fix (WVF), this tool identifies high-probability turning points where market "panic" meets a recovery in price action.

Unlike standard RSI indicators that fire signals based on a single threshold, this script uses a Multi-Stage Exhaustion System to categorize the depth of a reversal, helping traders distinguish between a minor bounce and a major market bottom.

How It Works
The indicator looks for a specific "Dual-Confirmation" setup:

• Volatility Peak (The WVF): The script detects when price has dropped significantly relative to recent highs, creating a "Fear Peak" (indicated by the gray background).
  
• Momentum Pivot (The RSI): It then waits for the RSI to "pivot" or curl upward, confirming that the downward pressure has exhausted and buyers are stepping back in.
  

The Multi-Stage Signal System
Signals are color-coded based on the severity of the oversold condition at the time of the pivot:

🟣 Magenta (Extreme): RSI below 15. A rare, high-conviction "blow-off" bottom.

🔴 Red (High): RSI between 15–20. Deep exhaustion usually seen in major corrections.

🟠 Orange (Moderate): RSI between 20–25. A strong, reliable reversal zone.

🟡 Gold (Standard): RSI between 25–30. The classic oversold bounce.

💎 Cyan (Early Warning): A tactical signal that fires during high-volatility spikes even if the RSI hasn't touched 30. Perfect for catching "V-Bottoms" and sharp pullbacks in strong uptrends.

Key Features

• Volatility Memory: Includes a "WVF Memory" lookback, ensuring signals are captured even if the momentum shift happens a few bars after the peak of market fear.
  
• ATR-Adjusted Labels: Arrows are mathematically positioned below the candles using Average True Range (ATR) to ensure a clean, overlap-free chart regardless of the asset's price.
  
• Modern Pine Script v6: Optimized for performance and high-speed calculation on any timeframe.
  

Trading Instructions
For Bottom Fishing: Look for Magenta or Red arrows. These indicate the market is severely overextended.

For Trend Following: Use the Cyan (Early Warning) arrows to buy the dip during a bull market when the RSI stays relatively high but volatility spikes briefly.

Confluence: The gray background indicates "Peak Fear." The best signals often occur when an arrow appears while the background is active or immediately after it fades.