The Exponential Deviation Bands study is a trend-following technical indicator proposed by Vitali Apirine. While resembling the Bollinger Bands®, this indicator is based on the exponential deviation, not the standard deviation.
Three lines, or bands, are calculated: middle band, upper band, and lower band. The middle band is, by default, an exponential moving average of close price; you can select a different average type in the input parameters. The upper and lower bands are plotted, by default, two exponential deviations above and below the middle band, respectively. The exponential deviation is defined as exponential average of deviation of close price from its mean.
The resulting indicator is both trend-following and price-lagging because the exponential moving average is used. When the bands move upwards, an uptrend may be present. The bands moving lower may signify a downtrend. A flat trend may be present when the bands move sideways.
When the price breaks out of the Exponential Bands, it may signify a start of a new trend. When the price pierces the upper band and the upper band has recently started an upturn, an uptrend may be emerging. Price falling below the lower band that has recently taken a downturn may signify the start of a downtrend.
Input Parameters
| Parameter | Description |
|---|---|
length
|
The length with which averages and exponential deviation are calculated. |
num dev dn
|
The distance between the middle band and the lower band, in exponential deviations. |
num dev up
|
The distance between the middle band and the upper band, in exponential deviations. |
average type
|
The type of moving average to be used in calculations: simple, exponential, weighted, Wilder's, or Hull. |
Plots
| Plot | Description |
|---|---|
UpperBand
|
The upper exponential deviation band. |
MidLine
|
The middle band. |
LowerBand
|
The lower exponential deviation band. |
Example*
*For illustrative purposes only. Not a recommendation of a specific security or investment strategy.
Further Reading
1. "Exponential Deviation Bands" by Vitali Apirine. Technical Analysis of Stocks & Commodities, July 2019.