Parabolic Peak Indicator

This indictor combines the concept of Bollinger Bands with a Sharpe Ratio calculation. The period used for calculation and the band widths can be adjusted. This was developed to be used on BTC and is best used on the weekly timeframe (with settings 20, close, 1, 2, and 3.2) although it can be used on any timeframe and the period used can be changed to compensate. For example, if you would like to view the chart on the daily timeframe for the use of other indicators but would like to view this on the weekly you can multiply your period by 7 to compensate (settings 140, close, 1, 2, and 3.2).

It is best viewed with bars rather than candles. Bars closing above the nominal green line are colored green. Bars closing below the nominal green line are colored red. Peak values of bars exceed the upper band they will be colored fuchsia, indicating the price may be nearing a peak high. When minimum values of bars fall below the lower band they will be colored lime green, indicating the price may be nearing a capitulation low.

Observations:
-First and foremost, market trend is indicated by the general bar colors (green/red).

-Different bands act similar to support and resistance during shorter timeframe price action.

-The farther price is away from the nominal green line the more you are over/underpaying for the asset based on the Sharpe Ratio.

-On BTC the indicator acts fairly reliably but different multipliers may be needed at different historical levels of maturity of the asset.

-Aside from detecting parabolic peaks, when price triggers a signal during an uptrend you will very often see an opportunity to buy at that price again at some point -in other words price will eventually normalize and give you another opportunity (much like filling gaps).

-After a significant consolidation period large moves can set off the high or low signal (fuchsia/lime green) as price expands into a new regime after the consolidation. These signals should be viewed as the establishment of a new trend direction rather than an indication of a true high or low.

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