OPEN-SOURCE SCRIPT
Z-Score Indicator [mr2j]
This script calculates the Z-score over any lookback window. It provides an understanding if the current price is relatively high or low - and subsequently is close to a correction.
Z-scores can be broken down into probabilities, where Z-scores
Above 2 occurs 2.3% of the time (very uncommon) [RED ZONE]
Between 1 and 2 occurs 13.6% of the time (elevated) [ORANGE ZONE]
Between 0 and 1 occurs 34.1% of the time (normal) [GREEN ZONE]
Between -1 and 0 occurs 34.1% of the time (normal) [GREEN ZONE
Between -2 and -1 occurs 13.6% pf the time (elevated) [ORANGE ZONE]
Below -2 occurs 2.3% of the time (very uncommon) [RED ZONE]
So by paying attention to what zone price action currently is, we can make predictions about short time price corrections.
Normal zone - no assumptions can be made
Elevated zone - pay attention for further escalation
Very uncommon zone - expect price correction over the short term
Note. Price action is not normally distributed, and as such this indicator can not predict price action with any statistical certainty. It can however, serve as an indicator for upcoming price reversals.
Z-scores can be broken down into probabilities, where Z-scores
Above 2 occurs 2.3% of the time (very uncommon) [RED ZONE]
Between 1 and 2 occurs 13.6% of the time (elevated) [ORANGE ZONE]
Between 0 and 1 occurs 34.1% of the time (normal) [GREEN ZONE]
Between -1 and 0 occurs 34.1% of the time (normal) [GREEN ZONE
Between -2 and -1 occurs 13.6% pf the time (elevated) [ORANGE ZONE]
Below -2 occurs 2.3% of the time (very uncommon) [RED ZONE]
So by paying attention to what zone price action currently is, we can make predictions about short time price corrections.
Normal zone - no assumptions can be made
Elevated zone - pay attention for further escalation
Very uncommon zone - expect price correction over the short term
Note. Price action is not normally distributed, and as such this indicator can not predict price action with any statistical certainty. It can however, serve as an indicator for upcoming price reversals.
Script open-source
Dans le plus pur esprit TradingView, l'auteur de ce script l'a publié en open-source, afin que les traders puissent le comprendre et le vérifier. Bravo à l'auteur! Vous pouvez l'utiliser gratuitement, mais la réutilisation de ce code dans une publication est régie par nos Règles. Vous pouvez le mettre en favori pour l'utiliser sur un graphique.
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