The Directional Volatility indicator is a powerful tool for traders looking to gauge market sentiment. This indicator showcases two distinct volatility lines: one for bullish trends and another for bearish movements.
There are two main parameters you can tweak to suit your trading style:
- Period - This refers to the calculation period you want to analyze.
- Deviation - This represents the volatility deviation.
How It Works:
Short = ShortMA + Deviation * ShortDev
Long = LongMA + Deviation * LongDev
Where:
ShortMA = EMA(ShortS, Period)
ShortDev = StdDev(ShortMA, Period)
ShortS = PrevClose - Low
LongMA = EMA(LongS, Period)
LongDev = StdDev(LongMA, Period)
LongS = High - PrevClose
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