This indicator combines two technical analysis tools: EMAs to identify trends and Bollinger Bands to measure volatility and overbought/oversold levels.
These are three lines that form a channel around the price:
- Upper Band (red): Indicates a possible overbought zone
- Middle Band (blue dotted): This is the 20-period moving average, showing the average price
- Lower Band (green): Indicates a possible oversold zone
- Purple Fill: The area between the upper and lower bands shows market volatility
Configuration:
- Uses a 20-period SMA by default
- Standard deviation of 2.0
- You can change the type of moving average (SMA, EMA, WMA, etc.)
- EMA 9 (red line): Fast average that closely follows the current price
- EMA 21 (green line): Slower average that indicates the medium-term trend
- Green: When EMA 9 is above the middle band (uptrend)
- Red: When EMA 9 is below the middle band (downtrend)
Bullish Signals:
- Price above the middle band
- EMA 9 above the middle band (green fill)
- EMA 9 above EMA 21
Bearish Signals:
- Price below the middle band
- EMA 9 below the middle band (red fill)
- EMA 9 below EMA 21
Volatility:
- Wide bands = high volatility
- Narrow bands = low volatility (possible breakout coming)
Translated with DeepL.com (free version)