Standard Error Bands

Definition

The Standard Error Bands indicator is used to show the direction of the trend and the volatility around the trend.
Developed by Jon Anderson in 1996, Technical Analysis of Stocks and Commodities.

The Standard Error Bands indicator produces three plots:
1. The lower plot (the lower standard error band);
2. The middle plot;
3. The upper plot (the upper standard error band).

The lower standard error band is a result of subtracting two standard errors from the end value of the linear regression line. The middle point is the ending value of a 21-period linear regression line. The upper standard error band is the result of adding two standard errors to the ending value of the regression line. A three-bar moving average is plotted that is based on the ending value of the regression line and the standard errors.

An Island Reversal Down bar is similar to the Gap Up Bar except that an Island Reversal Down bar's Close must fall within the lower percentage of the bar.

Default Inputs

Length sets the number of bars over which to locate the highest High, for comparison to the Low of the possible island bar, 4 by default.

PctRange sets the percentage of the range of the bar, above the Low of the bar, in which the Close must be located, 30 by default.