Bollinger Bands Z-Score

Bollinger Bands Z-Score Indicator

This indicator transforms the classic Bollinger Bands into a Z-Score oscillator displayed in a separate pane. It standardizes the Bollinger Bands’ basis line by calculating the Z-Score over a user-defined period, allowing you to see how many standard deviations the price deviates from the mean.

Upper and Lower Fixed Lines: These are set at +2 and -2 Z-Score levels, representing common thresholds for overbought and oversold conditions.

Z-Score Oscillator: The normalized Bollinger Bands oscillate smoothly between these fixed boundaries, providing a clearer perspective on volatility extremes.

Z-Score Table: Displayed on the right side, this table shows the current Z-Score value, along with fixed maximum (+2) and minimum (-2) limits, making it easy to track current momentum and volatility in real-time.

Use Cases:

Identify overextended price moves with standardized volatility measures.

Spot potential reversals or continuation setups by observing the Z-Score crossing key levels.

Complement traditional Bollinger Bands analysis with a statistically normalized perspective.

Input Parameters:

Length: The period used for Bollinger Bands and Z-Score calculation.

MA Type: Choose the moving average type for the basis line (SMA, EMA, SMMA, WMA, VWMA).

StdDev: Multiplier for the standard deviation bands.

Z-Score Length: The lookback period used to compute the mean and standard deviation for Z-Score normalization.

This indicator is perfect for traders seeking a statistically sound and visually clear representation of Bollinger Bands volatility and extremes.