Value Spectrum | Oquant

Overview
The Value Spectrum is an indicator designed to provide traders with a visual and quantitative assessment of price positioning relative to a dynamic baseline, helping to identify potential value zones, overextensions, and fair value conditions in various market environments. It builds on traditional volatility envelope concepts but introduces multi-tiered bands with customizable smoothing and a spectrum-based classification system to offer a more nuanced view of market conditions. This allows traders to quickly gauge where price stands in its "value spectrum" without relying solely on binary overbought/oversold signals.

Key Factors/Components
Baseline: A selectable moving average that serves as the central reference point for the envelope.
Volatility Measure: Derived from standard deviation, with optional smoothing to reduce noise in choppy markets.
Multi-Level Bands: Six upper and lower bands are incremented with steps of 0.5x, creating a graduated spectrum rather than fixed thresholds.
Value Classification: A table that categorizes the current price position into distinct levels, such as fair value, oversold, or overbought, for at-a-glance analysis.

How It Works
The indicator calculates a baseline using the chosen moving average type applied to the selected source (e.g., close price). It then measures volatility through standard deviation over a specified length, which can be smoothed using methods like median or other averages to adapt to market noise. Bands are constructed by adding and subtracting multiples of this volatility from the baseline, forming a series of widening zones. Price is evaluated against these zones to determine its position in the spectrum—closer to the baseline suggests fair value, while farther out indicates increasing degrees of extension. The visual fills between bands use gradient transparency to highlight the progression, and the table updates in real-time to label the current state based on where price falls.

For Who It Is Best/Recommended Use Cases
This indicator is best suited for swing traders, and mean-reversion strategists who need to assess relative value mainly in ranging markets. Recommended use cases include:
Identifying entry points in oversold/overbought conditions.
Confirming fair value zones for holding positions or scaling in.
Monitoring extreme extensions as potential reversal warnings.

Settings and Default Settings
Source: Defines the input data series (default: close).
Select MA for Baseline: Choose from options like SMA, EMA, ALMA, HMA, WMA, LSMA, DEMA, TEMA, SMMA(RMA), FRAMA, ZLEMA, T3, VWMA, TRIMA (default: DEMA).
MA Length: Period for the baseline calculation (default: 30).
Alma Offset: Adjusts the offset for ALMA if selected (default: 0.85).
Alma Sigma: Sets the sigma for ALMA if selected (default: 4).
T3 Vol Factor: Volume factor for T3 if selected (default: 0.7).
SD Length: Period for volatility calculation (default: 21).
Smooth Volatility: Enables/disables volatility smoothing (default: false).
Select Volatility Smoothing Method: Options include MEDIAN, SMA, EMA, DEMA, WMA (default: MEDIAN).
Volatility Smoothing Length: Period for smoothing volatility if enabled (default: 20).
Show Table: Toggles the display of the value classification table (default: true).

Conclusion
The Value Spectrum offers a flexible and insightful way to visualize price in context, empowering traders to make informed decisions based on a structured assessment of market value. By customizing the baseline and volatility components, it adapts to different trading styles and assets, providing clarity in different conditions.

⚠️ Disclaimer: This indicator is intended for educational and informational purposes only. Trading/investing involves risk, and past performance does not guarantee future results. Always test and evaluate indicators/strategies before applying them in live markets. Use at your own risk.