MACD+BB (SH v1.1)

Twitter: @DrSHelmet. All credit and thanks to Cryptobiasfunke for this strategy.

Disclaimer: I take no responsibility for your usage of this indicator.


Description:
Indicator version: 1.1

This custom script plots the MACD histogram, applies Bollinger bands to the histogram, and then colours the Bollinger bands in different colours depending on whether the bands are contracting or expanding.

Suggested strategy:

Periods of low volatility, seen in a Bollinger band pinch, are followed by large moves (BB expansion). A contraction of the MACD BB may similarly precede a significant move in price. This indicator allows you to see when such a move may be starting, by watching for colour change (default: blue-->orange) on the BB lines after a BB pinch has occured. If the MACD histogram is increasing in magnitude and surfing the BB in a certain direction, this suggests a price move is starting in the direction of the histogram.

Intended for short-timeframe scalping (<1hr charts), but initial testing suggests some validity on higher timeframes.