Ichimoku Z-Score Stochastic Oscillator with Kumo Depth Analysis

7 Jun 2023

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Ichimoku Z-Score Stochastic Oscillator with Kumo Depth Analysis
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Script Overview

Welcome to the Advanced Ichimoku Z-Score Stochastic Oscillator with Kumo Depth Analysis. This unique strategy is designed to provide a comprehensive, multi-timeframe trading view by leveraging the Ichimoku Cloud, Z-Score, Stochastic Oscillator, and an innovative implied volatility measure – the Kumo Depth. By integrating these powerful tools into one script, traders can make more informed decisions by considering trend strength, volatility, and volume in one holistic view.

Rationale & Strategy

The script was created with the rationale that trading decisions should not only be based on price action and volume, but also on market trend strength and implied volatility. The script integrates these various elements:

• The Ichimoku Cloud, a versatile indicator that provides support and resistance levels, trend direction, and momentum all at once.
  
• The Z-Score, a statistical measurement of a value's relationship to the mean (average) of a group of values.
  
• The Stochastic Oscillator, a momentum indicator that uses support and resistance levels to determine probable trend reversals.
  
• The Kumo Depth Analysis, an innovative measure of implied volatility and market trend strength derived from the thickness of the Ichimoku Cloud.
  

How It Works

This script works by providing visual buy and sell signals based on the confluence of the aforementioned tools.

• Ichimoku Cloud and Z-Score: The script first calculates the Ichimoku Cloud lines for both a higher and lower timeframe and measures how much current prices deviate from the cloud using Z-Score.
  
• Stochastic Oscillator: This Z-Score is then inputted into a Stochastic Oscillator, thus giving the oscillator a more normalized range.
  
• Kumo Depth Analysis: Simultaneously, the thickness of the Ichimoku Cloud (Kumo) is calculated as an implied volatility indicator. This depth is normalized and used as a filter to ensure we are trading in a market with substantial trend strength.
  
• Signals: Buy and sell signals are triggered based on the crossover and crossunder of the Stochastic Oscillator lines. Signals are then filtered based on their location relative to the Ichimoku Cloud (price should be above the cloud for buy signals and below for sell signals) and the normalized Kumo Depth.
  

How to Use

• Signal Types: The script provides both strong and weak signals. Strong signals are accompanied by high volume, while weak signals are not. Strong buy signals are indicated with a green triangle at the top, strong sell signals with a red triangle at the bottom. Weak signals are shown as blue and yellow circles, respectively.
  
• Trend Strength: The trend strength is shown by the normalized Kumo Depth. The greater the Kumo Depth, the stronger the trend.
  
• Timeframes: You can customize the timeframes used for the calculations in the input settings.
  
• Adjustments: Users can adjust parameters such as the Ichimoku settings, Stochastic Oscillator settings, timeframes, and Kumo Depth settings to suit their trading style and the characteristics of the asset they are trading.
  

This script is a complete trading strategy tool providing multi-timeframe, trend-following, and volume-based signals. It's best suited for traders who understand the concepts of trend trading, stochastic oscillators, and volatility measures and want to incorporate them all into one powerful, comprehensive trading strategy.

7 Jun 2023

Nota Keluaran

Updated default values for usability.

12 Jun 2023

Nota Keluaran

• Updated defaults from 1D & 1H to 1H and 5m. Ensure you set these to match your style. I recommend the lower timeframe setting should be set to "Chart" (i.e. your current timeframe).
  
• Added crossover symbols to make it easier to identify when there is a cross up/down on either line.