Custom Volatility Spike Detector

Title:
Custom Volatility Spike Detector

Overview:
This custom indicator integrates conventional statistical techniques with a unique algorithm to detect abrupt volatility spikes. When a spike is detected, the background color of the corresponding bar is automatically changed to visually highlight the event. This allows traders to quickly identify potential market reversal points or high-risk periods. Additionally, the detected spikes provide valuable reference information for drawing resistance and support lines, assisting in entry and exit decision-making.

Features:

・High-Precision Spike Detection:
Combines Bollinger Bands (using standard deviation) with percentile range analysis to identify statistically significant volatility spikes.
・Visually Clear Alerts:
Changes the background color of the affected bar, ensuring that signals are immediately noticeable without cluttering the chart.
・Volume-Based Filtering:
Confirms spike validity by comparing current volume against average and recent high-volume levels, thereby filtering out unreliable signals during low-activity periods.
・Clean and Minimalistic Design:
Avoids unnecessary drawings and labels, maintaining a clear chart and keeping the focus on key market signals.

How It Works:

・Statistical Analysis:
The indicator calculates volatility using both a standard deviation method and a percentile-based approach over a specified lookback period, detecting only statistically significant movements.
・Volume Confirmation:
A volume filter compares current volume against average and recent peak levels, ensuring that only spikes with sufficient market activity are considered valid.
・Automated Highlighting:
Once a valid spike is detected, the indicator automatically changes the background color of the corresponding bar, drawing immediate attention to the event.

Use Cases:

・Identifying Market Reversal Points:
Quickly pinpoint periods of high volatility that may indicate potential breakouts or reversals.
・Enhanced Risk Management:
Recognize sudden market shifts early to adjust positions or tighten stop losses during periods of increased risk.
・Supplementary Technical Analysis:
Use in conjunction with other indicators to validate market conditions and improve your overall trading strategy.
・Assisting in Drawing Resistance and Support Lines:
Utilize detected spikes as reference points to aid in identifying key resistance and support levels.

Originality and Value:
This indicator leverages standard volatility analysis techniques enhanced by a unique volume filter and algorithm to achieve superior precision and reliability. Its simple yet effective visual representation enables traders to quickly react to market changes, offering significant value as an auxiliary tool in technical analysis.

Disclaimer:

・This indicator is not intended to provide direct buy or sell signals; it serves as an auxiliary tool for market analysis.
・It is recommended to conduct thorough testing and validation, and to use this tool in conjunction with other analytical methods.
・Use of this indicator is at the user's own risk.

Credits:

・This script is an original development by PakunFX and is not copied from any existing work.
・While it employs standard volatility analysis methods, its unique algorithm delivers unmatched precision and reliability.