Z-Score Candles
The Z-Score Candles indicator is a powerful tool designed to help traders identify overbought and oversold conditions in the market. It utilizes the concept of the Z-score, which measures the deviation of a data point from its mean in terms of standard deviations.
By applying a sigmoid transformation to the Z-score values of the price candles, this indicator provides a visual representation of the market sentiment. The resulting sigmoid candles offer a clearer view of potential trend reversals and market extremes.
Parameters:
Length: The length parameter determines the number of bars used in the calculations. A higher value results in a smoother representation of the Z-scores, while a lower value makes the indicator more responsive to short-term price movements.
Features:
Sigmoid Function: The indicator incorporates a sigmoid function to transform the Z-score values, making them more suitable for visual analysis.
Original Price Candles: The indicator plots the sigmoid candles, representing the open, high, low, and close values of the price action. Green candles indicate a positive sentiment (szopen < szclose), while red candles indicate a negative sentiment (szopen >= szclose).
Oversold and Overbought Areas: The indicator creates horizontal lines at 0.1 and 0.9 on the y-axis, representing oversold and overbought levels, respectively. Additionally, it adds shaded areas to highlight the extreme regions.
Usage: Traders can utilize the Z-Score Candles indicator to identify potential market turning points, reversals, and overextended price levels. When the sigmoid candles reach the oversold or overbought areas, it may suggest a possible trend reversal or the initiation of a new trend.
Note: This indicator should be used in conjunction with other technical analysis tools and indicators to confirm trading decisions.
By applying a sigmoid transformation to the Z-score values of the price candles, this indicator provides a visual representation of the market sentiment. The resulting sigmoid candles offer a clearer view of potential trend reversals and market extremes.
Parameters:
Length: The length parameter determines the number of bars used in the calculations. A higher value results in a smoother representation of the Z-scores, while a lower value makes the indicator more responsive to short-term price movements.
Features:
Sigmoid Function: The indicator incorporates a sigmoid function to transform the Z-score values, making them more suitable for visual analysis.
Original Price Candles: The indicator plots the sigmoid candles, representing the open, high, low, and close values of the price action. Green candles indicate a positive sentiment (szopen < szclose), while red candles indicate a negative sentiment (szopen >= szclose).
Oversold and Overbought Areas: The indicator creates horizontal lines at 0.1 and 0.9 on the y-axis, representing oversold and overbought levels, respectively. Additionally, it adds shaded areas to highlight the extreme regions.
Usage: Traders can utilize the Z-Score Candles indicator to identify potential market turning points, reversals, and overextended price levels. When the sigmoid candles reach the oversold or overbought areas, it may suggest a possible trend reversal or the initiation of a new trend.
Note: This indicator should be used in conjunction with other technical analysis tools and indicators to confirm trading decisions.