Internal Bar Strength IBS [Anan]

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This indicator calculates and displays the Internal Bar Strength (IBS) along with its moving average. The IBS is a measure that represents where the closing price is relative to the high-low range of a given period.

█ Main Formula
The core of this indicator is the Internal Bar Strength (IBS) calculation. The basic IBS formula is:

Pine Script®

I enhanced the original formula by incorporating a user-defined length parameter. This modification allows for greater flexibility in analysis and interpretation. The extended version enables users to adjust the indicator's length according to their specific needs or market conditions. Notably, setting the length parameter to 1 reproduces the behavior of the original formula, maintaining backward compatibility while offering expanded functionality:

Pine Script®

Where:
- `close` is the closing price of the current bar
- `lowest low` is the lowest low price over the specified IBS length
- `highest high` is the highest high price over the specified IBS length

█ Key Features
- Calculates IBS using a user-defined length
- Applies a moving average to the IBS values
- Offers multiple moving average types
- Includes optional Bollinger Bands or Donchian Channel overlays
- Visualizes bull and bear areas

█ Inputs
- IBS Length: The period used for IBS calculation
- MA Type: The type of moving average applied to IBS (options: SMA, EMA, SMMA, WMA, VWMA, Bollinger Bands, Donchian)
- MA Length: The period used for the moving average calculation
- BB StdDev: Standard deviation multiplier for Bollinger Bands

█ How to Use and Interpret
1. IBS Line Interpretation:
- IBS values range from 0 to 1
- Values close to 1 indicate the close was near the high, suggesting a bullish sentiment
- Values close to 0 indicate the close was near the low, suggesting a bearish sentiment
- Values around 0.5 suggest the close was near the middle of the range

2. Overbought/Oversold Conditions:
- IBS values above 0.8 (teal zone) may indicate overbought conditions
- IBS values below 0.2 (red zone) may indicate oversold conditions
- These zones can be used to identify potential reversal points

3. Trend Identification:
- Consistent IBS values above 0.5 may indicate an uptrend
- Consistent IBS values below 0.5 may indicate a downtrend

4. Using Moving Averages:
- The yellow MA line can help smooth out IBS fluctuations
- Crossovers between the IBS and its MA can signal potential trend changes

5. Bollinger Bands/Donchian Channel:
- When enabled, these can provide additional context for overbought/oversold conditions
- IBS touching or exceeding the upper band may indicate overbought conditions
- IBS touching or falling below the lower band may indicate oversold conditions

Remember that no single indicator should be used in isolation. Always combine IBS analysis with other technical indicators, price action analysis, and broader market context for more reliable trading decisions.