Delorean STO SC-SV v.2.0

• 1. Purpose and Context
  This oscillator, developed by mboliart (https://x.com/mboliart), is an evolution of the classic stochastic indicator, optimized for instruments with high volatility. Version 2.0 incorporates a volatility adjustment based on the Average True Range (ATR), making it more adaptable to sharp price movements, such as those seen in Bitcoin and DAX40. Its name, DELOREAN sto SC-SV, reflects its ability to “navigate” through market conditions (SC for overbought and SV for oversold).
• 2. Configurable Parameters
  The indicator uses several predefined parameters for its calculations:
  • Period = 200: The range of bars used to calculate historical price highs and lows.
  • K = 20: The period for the exponential moving average of the K line.
  • D = 20: The period for the exponential moving average of the D line.
  • N = 8: The period for the exponential moving average applied to the adjusted J line.
  • ATRPeriod = 14: The period used to calculate the ATR, which measures recent volatility.
• 3. Calculation of the Base Oscillator
  The base oscillator measures the position of the closing price (CLOSE) within the price range of the last 200 bars:
  • The highest (masalto = HIGHEST[Period](HIGH)) and lowest (masbajo = LOWEST[Period](LOW)) prices over 200 bars are calculated.
  • The oscillator is obtained using the formula:
    oscilador = (CLOSE – masbajo) / (masalto – masbajo) * 100
    This produces a value between 0 and 100, where 0 indicates the price is at its historical low and 100 at its historical high.
• 4. Main Lines (K, D, and J)
  From the base oscillator, three main lines are generated:
  • K Line (%K): An exponential moving average of 20 periods applied to the base oscillator (liniaK = ExponentialAverage[K](oscilador)), smoothing out price fluctuations. It is displayed in blue with a thickness of 2.
  • D Line (%D): An exponential moving average of 20 periods applied to the K line (liniaD = ExponentialAverage[D](liniaK)), acting as a slower signal. It is displayed in magenta with a dotted line style.
  • J Line: Calculated as liniaJ = 3 * liniaK – 2 * liniaD, a formula that amplifies the divergence between K and D, making it sensitive to potential reversals. In this version, J is adjusted for volatility (see the next point).
• 5. Volatility Adjustment (Adjusted J Line)
  To make the oscillator more effective in volatile markets, the J line is adjusted using the Average True Range (ATR):
  • The ATR is calculated over a 14-bar period: atr = AverageTrueRange[ATRPeriod](CLOSE).
  • The ATR is normalized by dividing it by its 14-period exponential moving average: factorvolatilidad = atr / atrmedia.
  • The adjusted J line is obtained as: liniaJvol = liniaJ * factorvolatilidad.
    This means that during periods of high volatility, J is amplified, and during low volatility, it is reduced, improving its sensitivity to market conditions. The adjusted J line is displayed in green.
• 6. EMA of the Adjusted J Line
  To smooth the adjusted J line and facilitate the identification of crossover signals, an 8-period exponential moving average is calculated:
  • emaJNvol = ExponentialAverage[N](liniaJvol).
    This line, known as EMA CRUCE SC/SV, is displayed in red and is useful for confirming trends or detecting crossovers with the adjusted J line.
• 7. Reference Levels
  The oscillator includes static levels to aid interpretation:
  • L100 = 100: Maximum level, indicating extreme overbought conditions (dotted line).
  • L80 = 80: Overbought level (solid line).
  • L50 = 50: Neutral level (dotted line).
  • L20 = 20: Oversold level (solid line).
  • L0 = 0: Minimum level, indicating extreme oversold conditions (dotted line).
    These levels help traders identify key zones on the chart.
• 8. Visualization
  The indicator returns the following lines with specific styles and colors:
  • %K (blue, thickness 2, solid line).
  • %D (magenta, dotted line).
  • %J adjusted (green, solid line).
  • EMA CRUCE SC/SV (red, solid line).
  • Reference levels (L100, L80, L50, L20, L0) with varied styles (dotted or solid) for easy distinction.
• 9. Practical Application
  The DELOREAN sto SC-SV v.2.0 oscillator is ideal for:
  • Detecting overbought conditions (J near 80-100) and oversold conditions (J near 0-20).
  • Identifying potential reversals through crossovers between the adjusted J line and its EMA.
  • Adapting to volatile markets thanks to the ATR adjustment, making it particularly useful for Bitcoin and DAX40.

Share this