Volatility indicator based on the article 10 Selling Tips by Thomas Bulkowski.
It has two configurable parameters:
- Period – calculation period
- Multiplier – ratio of the line deviation from the price
Calculation:
VSO = Multiplier * Avg / Close
where:
Avg = SMA(High,Period) - SMA(Low,Period)
It can be used with the Volatility Stop indicator.
Fig. 1. Volatility Stop oscillator
Fig. 2. Volatility Stop oscillator + Volatility Stop
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