OPEN-SOURCE SCRIPT
Simpson's Rule Bands @DaviddTech
Updated
This indicator uses Simpson's Rule to calculate the top and bottom bands based on price trends. It provides a visual representation of potential price reversal zones, which can be useful for identifying entry and exit points in the market.
How to use the indicator:
Add the indicator to your chart by searching for "Simpson's Rule Bands" in the indicators section on your trading platform.
The indicator will display four bands: Upper Band, Middle Band, Lower Band, and two margins (Upper Margin and Lower Margin).
The Upper and Lower Bands represent potential price reversal zones, while the Middle Band shows the average price level.
The Upper and Lower Bands represent potential price reversal zones, while the Middle Band shows the average price level.
When the price crosses above the Upper Band or below the Lower Band, it may indicate a potential price reversal. You can consider entering a short position when the price crosses above the Upper Band and a long position when the price crosses below the Lower Band.
The Upper and Lower Margin lines represent additional dynamic price levels. They can be used as a confirmation signal for entering trades or as a potential target for exiting trades.
Math behind the indicator:
The core of the indicator is based on Simpson's Rule, a method for numerical integration used to approximate definite integrals of functions. In this case, the function is the True Range (TR) of the price data.
The indicator calculates the inapproximability value by summing up the Simpson's Rule calculations for different intervals and dividing the result by 17. The intervals are created by varying the b parameter from 0.1 to 0.95 with a step of 0.05.
The average price level is calculated as the mean of the Simpson's Rule calculations for the open prices using the same intervals as for the inapproximability value.
The Upper and Lower Thresholds of Approximability are derived from the average price level and the inapproximability value, with a factor of 1.618 applied to the inapproximability value.
The Upper and Lower Margin lines are calculated using an Exponential Moving Average (EMA) of the close prices and the EMA of the price range (high - low) multiplied by a factor of 4.
By using Simpson's Rule and the True Range, this indicator aims to provide a unique perspective on price trends and potential reversal zones. The combination of bands and margin lines offers a more comprehensive view of market dynamics and can assist traders in making informed decisions.
How to use the indicator:
Add the indicator to your chart by searching for "Simpson's Rule Bands" in the indicators section on your trading platform.
The indicator will display four bands: Upper Band, Middle Band, Lower Band, and two margins (Upper Margin and Lower Margin).
The Upper and Lower Bands represent potential price reversal zones, while the Middle Band shows the average price level.
The Upper and Lower Bands represent potential price reversal zones, while the Middle Band shows the average price level.
When the price crosses above the Upper Band or below the Lower Band, it may indicate a potential price reversal. You can consider entering a short position when the price crosses above the Upper Band and a long position when the price crosses below the Lower Band.
The Upper and Lower Margin lines represent additional dynamic price levels. They can be used as a confirmation signal for entering trades or as a potential target for exiting trades.
Math behind the indicator:
The core of the indicator is based on Simpson's Rule, a method for numerical integration used to approximate definite integrals of functions. In this case, the function is the True Range (TR) of the price data.
The indicator calculates the inapproximability value by summing up the Simpson's Rule calculations for different intervals and dividing the result by 17. The intervals are created by varying the b parameter from 0.1 to 0.95 with a step of 0.05.
The average price level is calculated as the mean of the Simpson's Rule calculations for the open prices using the same intervals as for the inapproximability value.
The Upper and Lower Thresholds of Approximability are derived from the average price level and the inapproximability value, with a factor of 1.618 applied to the inapproximability value.
The Upper and Lower Margin lines are calculated using an Exponential Moving Average (EMA) of the close prices and the EMA of the price range (high - low) multiplied by a factor of 4.
By using Simpson's Rule and the True Range, this indicator aims to provide a unique perspective on price trends and potential reversal zones. The combination of bands and margin lines offers a more comprehensive view of market dynamics and can assist traders in making informed decisions.
Release Notes
Added EntriesOpen-source script
In true TradingView spirit, the author of this script has published it open-source, so traders can understand and verify it. Cheers to the author! You may use it for free, but reuse of this code in publication is governed by House rules. You can favorite it to use it on a chart.
Want to use this script on a chart?
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♥ @DaviddTech
daviddtech.com
🔥Telegram Group:
t.me/DaviddTech
⚡ Videos & Tutorials :
youtube.com/channel/UC7NJLsf6IonOy8QI8gt5BeA?sub_confirmation=1
♥ @DaviddTech
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.