Bollinger Bands combined with Telson T8

The Bollinger Bands combined with Telson T8 indicator identifies volatility contraction phases and trend direction by merging classic Bollinger Band logic with a Telson T3 (T8) moving average. This tool is designed to highlight "squeezes" where the bands narrow significantly, potentially forecasting an imminent directional expansion.

Usage

The indicator can be used to identify potential breakout opportunities. When the Bollinger Bands narrow below a user-defined percentage of the current price, the area between the bands is highlighted, signaling a period of low volatility.

Traders can use the Telson T8 moving average to determine the current trend bias. If the price is above the Telson T8, the trend is considered bullish (typically colored green); if below, it is bearish (typically colored red). A common strategy involves waiting for a "narrow" highlight to appear and then looking for a price breakout in the direction indicated by the Telson T8 slope or price crossover.

Details

The script utilizes two primary technical components:

• Bollinger Bands: Standard volatility bands calculated using a simple moving average (basis) and standard deviations. The script calculates the percentage width of these bands relative to the source price to detect "narrowing" phases.
• Telson T8: This is a variation of the T3 moving average, which is a triple-smoothed exponential moving average designed to reduce lag while maintaining smoothness. It uses a "factor" to control the damping and responsiveness of the line.

The indicator includes built-in alerts for trend changes (price crossing the Telson T8) and for the beginning or end of volatility contraction (narrowing) periods.

Settings

Bollinger Bands

• Source: The price data used for all calculations (default is Close).
• Bollinger Bands Length: The lookback period for the SMA and standard deviation.
• Bollinger Bands Multiplier: The number of standard deviations for the upper and lower bands.
• Percent Narrow BB to Highlight: The threshold percentage. If the width of the bands is less than this percentage of the price, the background is highlighted.

Telson T8

• T8 Factor: Controls the smoothing/damping of the Telson T3 calculation.
• T8 Length: The period for the EMA smoothing within the Telson calculation.

FAQ

How do I use the narrowing highlight?

The highlight appears when volatility is low. You can adjust the "Percent Narrow BB to Highlight" setting to make this more or less sensitive depending on the asset's typical volatility.

What is the Telson T8?

The Telson T8 is a smooth, low-lag moving average based on T3 logic. It helps filter out market noise and provides a clearer view of the primary trend direction.

How to access Bollinger Bands combined with Telson T8?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.