This is a script that shows the contango between spot and prices of Bitcoin to identify overbought and oversold conditions. Contango and backwardation are terms used to define the structure of the forward curve. When a market is in contango, the forward price of a contract is higher than the spot price. Conversely, when a market is in backwardation, the forward price of the contract is lower than the spot price.
The aggregate prices on top exchanges are taken and then averaged to obtain a Spot Average and a Average. The script then plots ( Average/Spot Average) - 1 to illustrate the percent difference (contango) between spot and prices of Bitcoin .
When in contango, Bitcoin may be overbought.
When in backwardation, Bitcoin may be oversold.