OA - Sigma Bands

Description:
The OA - Sigma Bands indicator is a fully adaptive, volatility-sensitive dynamic band system designed to detect price expansion and potential breakouts. Unlike traditional fixed-width Bollinger Bands, OA - Sigma Bands adjust their boundaries based on a combination of standard deviation (σ) and Average Daily Range (ADR), making them more responsive to real market behavior and shifts in volatility.

Key Concepts & Logic
This tool constructs three distinct band regions:

Sigma Bands (±σ):
Calculated using the standard deviation of the closing price over a user-defined lookback period. This acts as the core volatility filter to identify statistically significant price deviations.

ADR Zones (±ADR):
These zones provide an additional layer based on the percentage average of daily price ranges over the last 20 bars. They help visualize intraday or short-term expected volatility.

Dynamic Adjustment Logic:
When price breaks outside the upper/lower sigma or ADR boundaries for a defined number of bars (user input), the system recalibrates. This ensures that the bands evolve with volatility and don’t remain outdated in trending markets.

Inputs & Customization
Sigma Multiplier: Set how wide the sigma bands should be (default: 1.5).

Lookback Period: Controls how many bars are used to calculate the standard deviation (default: 200).

Break Confirmation Bars: Determines how many candles must close beyond a boundary to trigger band recalibration.

ADR Period: Internally fixed at 20 bars for stable short-term volatility measurement.

Full Color Customization: Customize the band colors and fill transparency to suit your chart style.

Benefits & Use Cases
Breakout Trading: Detect when price exits statistically significant ranges, confirming trend expansion.

Mean Reversion: Use the outer bands as potential reversion zones in sideways or low-volatility markets.

Volatility Awareness: Visually identify when price is compressed or expanding.

Dynamic Structure: The auto-updating nature makes it more reliable than static historical zones.

Overlay-Ready: Designed to sit directly on price charts with minimal clutter.

Disclaimer
This script is intended for educational and informational purposes only. It does not constitute investment advice, financial guidance, or a recommendation to buy or sell any security. Always perform your own research and apply proper risk management before making trading decisions.

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