OPEN-SOURCE SCRIPT
[blackcat] L1 Dynamic Multi-Layer Bollinger Bands
## Overview
The L1 Dynamic Multi-Layer Bollinger Bands script is a custom indicator designed to provide a comprehensive analysis of price movements using Bollinger Bands, a widely-used technical analysis tool. The Bollinger Bands consist of a middle band being a simple moving average (SMA) of the close price, and an upper and lower band that are respectively 1.382 and 2.56 times the standard deviation of the close price over a 21-day period.
## How to Use
1. **Add the Indicator to Your Chart**: Click on the "Add to Chart" button in the Pine-Script editor. This will add the L1 Dynamic Multi-Layer Bollinger Bands to your chart.
2. **Interpreting the Bands**: The Bollinger Bands are plotted on your chart. The middle band is the 21-day SMA of the close price. The upper band is 1.382 times the standard deviation above the middle band, and the lower band is 1.382 times the standard deviation below the middle band.
3. **Analyzing the Bands**: When the price moves above the upper band, it is considered an overbought condition. When the price moves below the lower band, it is considered an oversold condition. These are potential areas of support and resistance.
4. **Multi-Layer Structure**: The script also calculates two additional bands, `up2` and `loow2`, which are respectively 2.56 times the standard deviation above and below the middle band. These bands provide a more layered perspective on the volatility of the price.
5. **Color Coding**: The area between the upper and lower bands is filled with a color that indicates the direction of the price movement. Green indicates an upward trend, and red indicates a downward trend.
## Disclaimer
The information provided by this script is for educational purposes only and should not be used as the sole basis for any trading decisions. Trading involves risk, and it is possible to lose money when trading stocks and other financial instruments. Use this script at your own risk.
The L1 Dynamic Multi-Layer Bollinger Bands script is a custom indicator designed to provide a comprehensive analysis of price movements using Bollinger Bands, a widely-used technical analysis tool. The Bollinger Bands consist of a middle band being a simple moving average (SMA) of the close price, and an upper and lower band that are respectively 1.382 and 2.56 times the standard deviation of the close price over a 21-day period.
## How to Use
1. **Add the Indicator to Your Chart**: Click on the "Add to Chart" button in the Pine-Script editor. This will add the L1 Dynamic Multi-Layer Bollinger Bands to your chart.
2. **Interpreting the Bands**: The Bollinger Bands are plotted on your chart. The middle band is the 21-day SMA of the close price. The upper band is 1.382 times the standard deviation above the middle band, and the lower band is 1.382 times the standard deviation below the middle band.
3. **Analyzing the Bands**: When the price moves above the upper band, it is considered an overbought condition. When the price moves below the lower band, it is considered an oversold condition. These are potential areas of support and resistance.
4. **Multi-Layer Structure**: The script also calculates two additional bands, `up2` and `loow2`, which are respectively 2.56 times the standard deviation above and below the middle band. These bands provide a more layered perspective on the volatility of the price.
5. **Color Coding**: The area between the upper and lower bands is filled with a color that indicates the direction of the price movement. Green indicates an upward trend, and red indicates a downward trend.
## Disclaimer
The information provided by this script is for educational purposes only and should not be used as the sole basis for any trading decisions. Trading involves risk, and it is possible to lose money when trading stocks and other financial instruments. Use this script at your own risk.
Open-source script
In true TradingView spirit, the author of this script has published it open-source, so traders can understand and verify it. Cheers to the author! You may use it for free, but reuse of this code in publication is governed by House rules. You can favorite it to use it on a chart.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.