Machine Learning: STDEV Oscillator [YinYangAlgorithms]

2023년 12월 11일

This Indicator aims to fill a gap within traditional Standard Deviation Analysis. Rather than its usual applications, this Indicator focuses on applying Standard Deviation within an Oscillator and likewise applying a Machine Learning approach to it. By doing so, we may hope to achieve an Adaptive Oscillator which can help display when the price is deviating from its standard movement. This Indicator may help display both when the price is Overbought or Underbought, and likewise, where the price may face Support and Resistance. The reason for this is that rather than simply plotting a Machine Learning Standard Deviation (STDEV), we instead create a High and a Low variant of STDEV, and then use its Highest and Lowest values calculated within another Deviation to create Deviation Zones. These zones may help to display these Support and Resistance locations; and likewise may help to show if the price is Overbought or Oversold based on its placement within these zones. This Oscillator may also help display Momentum when the High and/or Low STDEV crosses the midline (0). Lastly, this Oscillator may also be useful for seeing the spacing between the High and Low of the STDEV; large spacing may represent volatility within the STDEV which may be helpful for seeing when there is Momentum in the form of volatility.

Tutorial:



Above is an example of how this Indicator looks on BTC/USDT 1 Day. As you may see, when the price has parabolic movement, so does the STDEV. This is due to this price movement deviating from the mean of the data. Therefore when these parabolic movements occur, we create the Deviation Zones accordingly, in hopes that it may help to project future Support and Resistance locations as well as helping to display when the price is Overbought and Oversold.



If we zoom in a little bit, you may notice that the Support Zone (Blue) is smaller than the Resistance Zone (Orange). This is simply because during the last Bull Market there was more parabolic price deviation than there was during the Bear Market. You may see this if you refer to their values; the Resistance Zone goes to ~18k whereas the Support Zone is ~10.5k. This is completely normal and the way it is supposed to work. Due to the nature of how STDEV works, this Oscillator doesn’t use a 1:1 ratio and instead can develop and expand as exponential price action occurs.



The Neutral (0) line may also act as a Support and Resistance location. In the example above we can see how when the STDEV is below it, it acts as Resistance; and when it’s above it, it acts as Support.

This Neutral line may also provide us with insight as towards the momentum within the market and when it has shifted. When the STDEV is below the Neutral line, the market may be considered Bearish. When the STDEV is above the Neutral line, the market may be considered Bullish.



The Red Line represents the STDEV’s High and the Green Line represents the STDEV’s Low. When the STDEV’s High and Low get tight and close together, this may represent there is currently Low Volatility in the market. Low Volatility may cause consolidation to occur, however it also leaves room for expansion.



However, when the STDEV’s High and Low are quite spaced apart, this may represent High levels of Volatility in the market. This may mean the market is more prone to parabolic movements and expansion.

We will conclude our Tutorial here. Hopefully this has given you some insight into how applying Machine Learning to a High and Low STDEV then creating Deviation Zones based on it may help project when the Momentum of the Market is Bullish or Bearish; likewise when the price is Overbought or Oversold; and lastly where the price may face Support and Resistance in the form of STDEV.

If you have any questions, comments, ideas or concerns please don't hesitate to contact us.

HAPPY TRADING!

2023년 12월 14일

릴리즈 노트

- Added the ability to see Bull and Bear Cross Signals when the STDEV Lower and Upper Bounds cross the Rationalized Average.

- Added ability to see this Rationalized Average 'Mid Line'.

- Added alerts for when the Mid Line is crossed.