Bollinger Adaptive Trend Navigator [QuantAlgo]

🟢 Overview

The Bollinger Adaptive Trend Navigator synthesizes volatility channel analysis with variable smoothing mechanics to generate trend identification signals. It uses price positioning within Bollinger Band structures to modify moving average responsiveness, while incorporating ATR calculations to establish trend line boundaries that constrain movement during volatile periods. The adaptive nature makes this indicator particularly valuable for traders and investors working across various asset classes including stocks, forex, commodities, and cryptocurrencies, with effectiveness spanning multiple timeframes from intraday scalping to longer-term position analysis.

🟢 How It Works

The core mechanism calculates price position within Bollinger Bands and uses this positioning to create an adaptive smoothing factor:

bbPosition = bbUpper != bbLower ? (source - bbLower) / (bbUpper - bbLower) : 0.5
adaptiveFactor = (bbPosition - 0.5) * 2 * adaptiveMultiplier * bandWidthRatio
alpha = math.max(0.01, math.min(0.5, 2.0 / (bbPeriod + 1) * (1 + math.abs(adaptiveFactor))))

This adaptive coefficient drives an exponential moving average that responds more aggressively when price approaches Bollinger Band extremes:

var float adaptiveTrend = source
adaptiveTrend := alpha * source + (1 - alpha) * nz(adaptiveTrend[1], source)
finalTrend = 0.7 * adaptiveTrend + 0.3 * smoothedCenter

ATR-based volatility boundaries constrain the final trend line to prevent excessive movement during volatile periods:

volatility = ta.atr(volatilityPeriod)
upperBound = bollingerTrendValue + (volatility * volatilityMultiplier)
lowerBound = bollingerTrendValue - (volatility * volatilityMultiplier)

The trend line direction determines bullish or bearish states through simple slope comparison, with the final output displaying color-coded signals based on the synthesis of Bollinger positioning, adaptive smoothing, and volatility constraints (green = long/buy, red = short/sell).

🟢 Signal Interpretation

• Rising Trend Line (Green): Indicates upward direction based on Bollinger positioning and adaptive smoothing = Potential long/buy opportunity
  
• Falling Trend Line (Red): Indicates downward direction based on Bollinger positioning and adaptive smoothing = Potential short/sell opportunity
  
• Built-in Alert System: Automated notifications trigger when bullish or bearish states change, allowing you to act on significant development without constantly monitoring the charts
  
• Candle Coloring: Optional feature applies trend colors to price bars for visual consistency
  
• Configuration Presets: Three parameter sets available - Default (standard settings), Scalping (faster response), and Swing Trading (slower response)