What are Directional Bollinger Bands?
Directional Bollinger Bands are a variation of the standard Bollinger Bands indicator. While classic Bollinger Bands consist of a moving average (central line) with bands placed a certain number of standard deviations above and below this moving average, the Directional Bollinger Bands adapt dynamically according to the current price direction.
How Directional Bollinger Bands Work:
Calculation Basis:
Uses a moving average (default 20 periods).
Bands are placed at a distance determined by a certain number of standard deviations from this moving average (default is 2 deviations).
Directional Adjustment:
The bands dynamically adjust based on the price’s direction:
Bullish Direction (price is above moving average):
The top line (TL) is calculated as the moving average plus 2 standard deviations.
The bottom line (BL) adjusts upward following price movement (trailing).
Bearish Direction (price is below moving average):
The bottom line (BL) is calculated as the moving average minus 2 standard deviations.
The top line (TL) adjusts downward following price movement (trailing).
Line Breaks (Gaps):
When the price crosses above or below the moving average, the bands briefly reset, creating breaks or gaps in the lines.
Directional Bollinger Bands.lua- (7.59 KiB) Downloaded 308 times
