Date/Time: Fri, 19 Jan 2018 09:49:26 +0000
Post From: Offering To The Community: Bollinger Band Ribbon
|bjohnson777 (Brett Johnson) - Posts: 204|
I've been programming some indicators from my base tool kit and am offering them to the community. I request they be added into the main SC distro once checked over.
From the "Display Study Documentation" button:
Bollinger Band Ribbon: Taking The Moving Average Ribbon To A New Extreme. Bollinger Bands take a moving average and add high and low lines at 2.0 standard deviations away (configurable) to help show movement ranges. A Bollinger Band Ribbon is a moving average ribbon with these high and low lines for each individual line. A moving average ribbon is a set of moving average lines of differing values following a single source. That source is usually price but non-oscillating indicators can also have a ribbon attached to them. It is recommended to give the ribbon a lot of screen height to see the movement... even more than a straight moving average ribbon. Institutional traders do use Bollinger Bands as seen by price lines bending, pausing, and reversing at the standard levels and with their high and low lines. The Primary Line is usually a small EMA number to closely track the source. If it's not needed, it can be set to another moving average number and type or set to disabled. The ribbon lines are usually Simple Moving Averages since that is what the big institutions use. Both moving average types can be changed.
The colors chosen are based on light frequency from slow to fast (think of a prism or rainbow). This method makes remembering the values much easier. Industry standard values are red=200, orange=100, yellow=50, green=35, and cyan=20. These can all be changed in the configuration menu.
This simple study offers the convenience of setting up 5 Bollinger Bands quickly in one place and making sure they are all scaled properly together on the same graph. It also simplifies the setup for automation.
At first glance this can be very confusing to look at, but it is easy to understand and use once explained. It's all about watching the data line.
If the data line is rising, identify which color top band it is touching the most. That is the channel the data line is in. Flip that over for a falling data line.
If the data line has a strong movement then goes flat, take note of which mid line it is sitting on or resting under. If the data line gets stuck between a mid line and outer band, the move may be over or about to reverse.
If the data line has gone flat, identify which color mid line it is crossing the most. Then look high and low for the outer bands of the same color. That will be the channel the data line is in. Watch for an eventual break out.
When rising or falling, the data line may cross a mid line and touch a top line that is also riding on the next level up mid line. That means the data line is fully in the channel of the first mid line but could break out to the top line of the second mid line.
During any real movement, the data line will mostly be in one channel, be popping into the next channel every now and then, and be constrained to the upper or lower section of the next channel up. If the move fails to hit the outer band of that highest level channel, the move may not be over yet.
Wave counters take note of the previous two points. The corrective waves will be the ones crossing outer bands and the next level mid lines. If the continuation movement doesn't return to the previous movement, the correction may be larger than expected or the overall movement may be over.
The 200 period bands are usually the long term channel for the data line. The data line will usually bounce back if it crosses its outer band lines (they may stretch a little). If the data line keeps going, look for a new long term trend direction to start.
In summary, Bollinger Bands are all about dynamic support and resistance lines and measuring movement. If a line on one level gets crossed, look for the action to be defined on the next level up (the bands will start expanding). If volatility starts to decrease, look for the action to be defined on the next level down (the bands will start contracting).
As an exercise to help you see the messy bands easier, pick a color and focus on it very hard. Try to block out all other colors except the one you're focusing on. While still focusing on that color, let your vision go soft. Without moving your eyes off the first color, look for the other lines of the same color in your peripheral vision. With a little practice, this will become easy.
Minor update 2016-10-15. No major function changes.
Regular compiles moved to "Brett Johnson's Standard Tool Kit" DLL.
Date Time Of Last Edit: 2016-10-15 06:40:49
BollingerBandRibbon.cpp - Attached On 2016-10-15 06:40:30 UTC - Size: 15.73 KB - 27 views
BollingerBandRibbon.dll - Attached On 2016-10-15 06:40:36 UTC - Size: 85 KB - 21 views