From a combination of Eric's Journal and BM's Envelope Expansion thread, this FibBand indicator was encouraged.
It started as a way to draw ratio-based bands above and below the VWAP versus the default standard deviation bands with fixed ratio that comes with Ninja.
Then, it developed the ability to base the bands on more than the VWAP, including Mike's Collective MA, close, open, midrange.
Meanwhile thanks to Geo's stimulating input, it also draws targets based on 3 approaches:
a) if the price hits lower band 1, a target is printed at the corresponding level near upper band 1, same for bands 2,3 etc.
b) the same as above except it waits for a swing low or high to form then uses that as the basis to calculate the targets. The purpose of this addition is to be able to visually check how often the initial triggers end up being at or close to a later swing low/high, and how often they are premature.
c) MM mode for targets applies a ratio of one bandwidth for a stop price based on entry at the band penetrated (i.e. one bandwidth, 1.5 bandwidths etc.) then draws two targets.
All target modes have target ratio for tgt1 and tgt2. The default tgtratio is 1 which means that when triggered it is one bandwidth. Except in MM mode when it is 1 * the initial stop amount. If the MMratio is 1 (= 1 bandwidth) and tgtratio = 1, then stop is one bandwidth and target is one bandwidth. If MMratio is 1.5 and tgt ratio is 1, then stop is 1.5 bandwidths and tgt1 is the same (1.5 bandwidths).
In all target modes, Tgt 2 ratio is a simple multiple of whatever Tgt 1 is, so if tgt 1 is one bandwidth and tgt2 ratio is 2, then tgt 2 is 2 bandwidths above/below the assumed entry price which is at the band penetrated or the swinghigh/low.
I have also added in a mid-range option inspired by some of the strategies put forward by The Rumpled One especially viz a) knowing the typical daily range of the instrument you are examining/trading b) buying near the expected lows of the day and/or assuming that a recent low after a sufficient bounce (say 1 band?) is the probable daily low, and then having reasonable expectation that this bounce will continue up to the level where a typical daily range is in effect.
There are two modes when basing price off open or midrange.
The first modes apply the bands as usual, using either the open or midrange as the base (Middle) price.
The second modes apply a faster atrratio to the bands (ATR(21)/ATR(108)). This means that if the short term ATR is expanding, that ratio will go over 1 and will similarly expand the bandwidths (and thus also targets) in a fashion that is more responsive to intraday volatility.
Also, you can manually override the open price by inputting a value in a price override input.
This is more complicated to explain than to do, and as I said in intro, most users after playing around for a little while will quickly settle on one or two modes.
The only complicated aspect now is the different midrange and open options because they require a combination of conditions to be applied correctly. These will take a little while to figure out by simply going through the options carefully and seeing what happens on the chart. Once you understand how they work, it is very simple.
Overview: the purpose of the indicator is twofold:
a) to provide general context of market action with visually unobtrusive indicator so that during live trading you have very basis OB/OS levels plotted in very thin lines on the chart.
b) the target options give instant visual 'read' on degree to which market is typically bouncing up and down around a mean or steadily trending. When steadily trending, for example, generally the targets in the direction of the trend will be less frequently plotted and the targets against the trend will tend not to be reached at all. If one wants to use the indicator for OB/OS in such conditions, then you can apply an MA-type Middle Band option (such as Collective, or ZeroLag 21) and tighten the bands. You can also use MA's like 5 or 10 with tighter Fib ratios to time …