Origin: The Indicator uses STARC volatilty bands created by Manning Stoller, based on ATR. He perfered them to Bollinger because extreme price action never exceeds them. Her former scholar and now TA Superstar Constance Brown applied them on RSI for getting very relavant trend reversals. (She only used them in times when "overbought or not" becomes a severe question. What it does: It delivers a reversal signal after rsi exceeded the bands and - as the bands resume the trend - the rsi fails to test the band once more. This is the moment of a reversal warning. How to work with: - Take the index of your interest and choose a time horizon one or two scales higher than your usual working horizon .(i.e if you work on Daily choose weekly). -Scale the upper and the lower band via settings, so that the rsi only in rare cases exceeds or touches the bands. This is to tweak the reversal threshold. (For weekly SPX i am fine with 2.2 and 2.1) - Find the arrows that mark possible reversals. - Ready
Note: I called this a beta because i publish it with nearly no practical experience with it , just checked the formal correctness of the code. (Published so fast because it was written during the coronavirus days, for which to handle it might be helpful. )So feedback very welcome. I took the formula in slight modification from the book "Technical Analysis for the Trading Professional", 2nd edition, by Constance Brown.
"Fun" Note: As you see the script would have warned before the corona selling - if you had used it. I didn't because bull flags and all predicted nice weather...
Greets and again feedback welcome yoxxx
Release Notes
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Update with removed drawings.
Release Notes
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Pointed to a misspelling in the title of my script, i took this as an opportunity to upgrade to pine 5 and add an optional wma (asked so by a follower.)
It is certainly no beta anymore, since it works well now for nearly 3 yrs. In most cases, an adjusting of the parameters as in the original description, is not necessary. Apparently you can't change the old title when publishing as update, so the typo and "[beta] must stay. (For the sake of a continuous like-counter. "Volatility", without typo, is part of "Category".)
Hi Constance brown use RSI with Moving avg sma 9 and Ema 45. Double starc band with period 6 and std dev 2.0 and 1.5. Can u modify this way. In her new book she showed importance of it.
A_Traders_Edge
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"-Scale the upper and the lower band via settings, so that the rsi only in rare cases exceeds or touches the bands" One great way to go about this so it is not as subjective is to use one of TV's in house functions: percentile_nearest_rank(), percentile_linear_interpolation(), percentrank() where you can define the lookback period and have the functions calculate on any source. So in this instance, if you opted for 99%, it would return the level in which 99% of the RSI data stayed below (within the lookback period). Heres a great example that the AMAZINGLY helpful user @allanster provided to assist other pinecoders in their endeavors (its where I learned its use case from): tradingview.com/script/AoChfBer-How-To-Use-Dynamic-Zones/. Hope it helps you even in the slightest and if you could use a hand implementing it hit me up, Id be glad to lend a hand (if you wanted to further develop the script that is).
baddymr
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Hi,
Can you add the option to select Multiple timeframe in the indicator so that i can test it as you have mentioned?
Thank you. I'll use it well ^^