STH-MVRV Bollinger Bands

11 Apr

STH-MVRV Bollinger Bands

🛠️ Detailes
This proprietary indicator seamlessly integrates on-chain data with advanced volatility metrics to construct adaptive Bollinger Bands that overlay directly on the price chart. Here’s a breakdown of its technical components:

Data Integration:

On-chain & Index Data: Utilizes BTC_MVRV (on-chain metric) and INDEX:BTCUSD (market index) to compute the STH-MVRV ratio.

Smoothing: Data series are smoothed with a configurable SMA (Simple Moving Average) over a user-defined period to reduce noise.

Ratio Computation:

Forms: Calculates three ratio variants:

STH-MVRV (MVRV)

STH-MVRV (Price)

STH-MVRV (AVG)

Dynamic Selection: The user can select the desired ratio from a dropdown menu.

Bollinger Bands Construction:

Basis & Deviation:

The basis is derived using the SMA of the selected ratio (or price, if substituted).

The standard deviation is scaled by a multiplier to form the upper and lower bands.

🟢 Green: When the selected ratio is ≥ 1 (bullish condition).

🔴 Red: When the selected ratio is < 1 (bearish condition).

Usage Recommendations:

Parameter Tuning: Adjust the moving average period, band length, and standard deviation multiplier to tailor the indicator to specific market conditions.

Multi-Timeframe Analysis: Combine with other technical indicators for a comprehensive risk management and trade execution strategy.

kelmarin

Nota Keluaran

STH-MVRV Bollinger Bands

🛠️ Detailes
This proprietary indicator seamlessly integrates on-chain data with advanced volatility metrics to construct adaptive Bollinger Bands that overlay directly on the price chart. Here’s a breakdown of its technical components:

1. On‑Chain & Price Inputs
BTC_MVRV (D): The daily short‑term holder Market‑Value‑to‑Realized‑Value ratio, pulled via request.security('BTC_MVRV','D',close).

BTCUSD Index (D): Daily spot price from INDEX:BTCUSD.

2. 155‑Day SMA (“MVRV 155”)
We apply a 155‑day Simple Moving Average to each series:

mvrv_MA   = ta.sma(btcMVRV, 155)   // Smooths MVRV over ~155 trading days (~7 calendar months)
price_MA  = ta.sma(btcPrice, 155)  // Same lookback on price

Why 155? Empirically, a 155‑day window captures medium‑term on‑chain holder cycles and aligns with typical quarterly rebalancing periods.

3. Normalized Ratios (STH‑MVRV)
After smoothing:

sthMVRV_onchain = btcMVRV  / mvrv_MA   // Deviation of on‑chain value from its 155‑day mean
sthMVRV_price   = btcPrice / price_MA  // Price’s deviation from its 155‑day mean
sthMVRV_avg     = math.avg(sthMVRV_onchain, sthMVRV_price)

Interpretation:

Values > 1.0 indicate the series is above its 155‑day trend (over‑extended).

Values < 1.0 indicate below‑trend conditions (potential undervaluation).

4. Adaptive Bollinger Bands on STH‑MVRV
Basis: N‑period SMA of whichever ratio you pick (default 20 days):

basis = ta.sma(selectedSTH, bbLen=20)

Volatility: Standard deviation over the same window, scaled by a multiplier (default 2.0):

dev = bbStdMult * ta.stdev(selectedSTH, bbLen)
upper = basis + dev
lower = basis - dev

Gradient Zones: Ten equidistant fills between each band and the basis to visually grade how far you are into an extreme.

5. Color Logic & Signals
Bullish (≥ 1.0): Teal/green fills when the ratio or its bands sit above 1.0.

Bearish (< 1.0): Red fills below 1.0.

1.0 Reference: A dotted horizontal line marks the “fair‑value” SMA crossover.

6. Sample Entry/Exit Triggers

// Long entry: ratio touches or crosses below lower band in bearish zone
if ta.crossunder(selectedSTH, lower) and selectedSTH < 1
    label.new(bar_index, lower, "Mean Reversion Buy", color=color.red)

// Short entry (or profit‑taking): ratio crosses above upper band in bullish zone
if ta.crossover(selectedSTH, upper) and selectedSTH > 1
    label.new(bar_index, upper, "Overextension Sell", color=color.teal)

🟢 Green: When the selected ratio is ≥ 1 (bullish condition).

🔴 Red: When the selected ratio is < 1 (bearish condition).

Usage Recommendations:

Parameter Tuning: Adjust the moving average period, band length, and standard deviation multiplier to tailor the indicator to specific market conditions.

Multi-Timeframe Analysis: Combine with other technical indicators for a comprehensive risk management and trade execution strategy.