Concept
Pangolin is an advanced real-time trend channel indicator designed based on the Standard Deviation algorithm
First, Pangolin calculates the parameter data set of candles with different historical distances to calculate the middle mean and standard deviation of the trend. Then, the middle mean line is calculated and multiplied by the standard deviation (the default parameter of PR is 2, which is 2 standard deviations) to expand the upper and lower sides, providing traders with a trend channel calculated based on the standard deviation offset.
This calculation calculates the results of 56 different parameter sets in real time in your TradingView App at intervals of seconds based on the time frame the trader is currently viewing, and finally displays the most accurate channel on the chart according to the following evaluation requirements:
Related to recent trends
The strongest
Ongoing
The channels calculated by this algorithm are completely different from the channels drawn by our daily manual drawing of the high and low ranges and swings. It provides us with more abundant information, such as the trend midline, fluctuation range, and fluctuation framework, etc. It brings immeasurable help to traders in trend and timing analysis.
The example above shows the channel calculated using our algorithm. As long as the correlation between the mean and the trend is high enough, the price we predict is:
When using 1 standard deviation: there is a 68% probability of fluctuation within the channel
When using 2 standard deviations (default parameters): there is a 95% probability of fluctuating within the channel
When using 3 standard deviations: there is a 99.7% probability of fluctuating within the channel
*At present, the 56 sets of parameters we use are the best parameter groups after tuning. The simplest way to verify the effectiveness of the mean moving average algorithm is to check whether the channel center line is respected as support and resistance by the price in the channel.
When will the channel change?
If you use the Replay feature of TradingView, you will find that the channel will fine-tune itself in real time with each price fluctuation. When the following situations occur, the currently displayed channel may lose to the channel of the new trend in the algorithm score and switch the channel parameter selection, and directly replace the new channel:
If the price moves to one side for a long time, and stays above the channel for a longer time, the channel will adjust its slope to a steeper slope accordingly.
The new trend fluctuation has a more accurate median value, and the algorithm will automatically select the channel display calculated by the new parameters
The current small trend fluctuations are consistent with the fluctuations of the entire large trend, and the algorithm will automatically display the channel of the larger trend upwards
*Because it is not a signal indicator, the real-time adjustment of the channel does not count as a repaint, but rather ensures that the most accurate trend and slope predicted based on historical data is displayed at the time of observation by the trader.
You can use it
Judging over-inflation and over-fall
Quickly determine volatility and amplitude
Using the trend's midline as support/resistance
Find the right entry area
Determine the trend reversal node
Enhance the confidence value of other signals
Layer Information
The Pangolin Channel is a gray channel consisting of three lines: the center line and the upper and lower edge lines. Its style can be customized in the indicator settings.
Analytical Strategy
Swing reversal: When the price touches the upper and lower sides and goes back to the channel, the winning rate of taking profit at the middle line is usually good.
Trend position: For an upward channel trend, only long positions are opened at low levels; for a downward channel trend, only short positions are opened at high levels.
Grid Robot: Available channel range is used as the range reference of the grid robot to save margin collateral
DCA Robot Range: Use HTFâs Pangolin Channel Range to set a buy range for DCA orders
Examples
Trading plan example
The following example is the AGLDUSDT.P 1H chart on February 11. By combining the Swing Fibonacci of PowerRanger with the hand-animated Fibonacci, the conviction value of the Trendline and SmartCloud + the crossover of the channel with the white magnet above, a RR1:2.29 long plan was created. This trading plan was then taken profit
Examples of out-of-range deviations
The following CYBERUSDT.P 4H chart shows the status of different parameters of the deviation value channel. The left and right are 4-hour charts. The left side shows the effect of the custom range multiplier of 3, and the right side shows the effect of the default parameter of 2. We can find
When set to 3 standard deviations: Prices rarely escape the channel range (99.7% of the time, statistically speaking, prices are within the channel range)
The channel is set to 2 standard deviations on the right: We can find many short opportunities because there are many small probability pinpoints that break through the deviation value range (according to the concept, when set to 2 and the middle value is valid, the probability of breaking through the channel range of 2 deviation values ââis 5%). The breakout at this time is usually a false breakout or a momentary breakout, rather than a normal organic trend rise.
Whether to use 2 or 3 for specific parameters is a more personal choice.
The default parameter of the indicator is 2, because in most cases, CYBER rarely occurs. When using 2, we can remind ourselves not to use the channel up and down to make stop losses. Secondly, we can adopt the price level of this edge to design entry and take profit, because the probability of touching the parameter 2 is higher than that of 3.
You can also choose to keep the parameter at 2 and turn on the Max Dev. option in the settings. When this option is turned on, the standard deviation channel with a parameter of 3 will be displayed simultaneously with the channel with customizable parameters to obtain the most comprehensive insights.
Verify channel validity
As explained in the concept, the effectiveness of the channel mainly comes from the intermediate values ââcalculated by the algorithm. The algorithm currently has 56 sets of built-in and tuned parameters, which can find perfect data for the price trend of the chart most of the time.
Below is the BNBUSDT 4H chart. We can verify the validity of the channel by checking whether the middle line of the Pangolin Channel has been accurately respected in the trend history. While checking, it is also an opportunity to verify the support and resistance price levels shown by other support and resistance tools provided by PowerRanger.
What if the channel validity cannot be verified? â
Although it rarely happens, remember that the indicator analyzes price behavior completely from a technical perspective. It cannot predict changes in breaking news. As shown in the figure below, the plunge in FTT bankruptcy and the surge in FTT restart rumors can be seen. Although it is impossible to predict such sudden price behavior, Pangolin still provides a credible range for subsequent trends, such as the breakthrough after the decline in the left figure and the peak in the right figure. In the left figure, where the channel cannot be verified by the midline, you can switch the time frame to find a verifiable channel, such as switching from the 4H on the left to the 1H on the right, or switching to 15m.
2 and 3 standard deviation channels displayed simultaneouslyâ
Our latest version of PowerRanger supports the simultaneous display of 2x and 3x standard deviation channels (which can be closed through custom settings), helping traders unlock more trading opportunities. As shown in the figure below, the inner channel is a range of 2 standard deviations, and the outer channel is a range of 3 standard deviations:
Parameter settings
Channel Range Mult: Channel range multiplier, the default value is 2, which is 2 standard deviations
That is, the calculated standard deviation x2 based on the midline is used to draw the upper and lower channel lines of the chart channel. It can be fine-tuned as needed, and the maximum should not exceed 3.
Max Dev.: Displays the 3 standard deviation channels together with the channel with the custom standard deviation parameter above.
Midline: You can choose to cancel the display of the midline of the channel. If you want to make the chart extremely simple, you can turn it off.
Color & Opacity: channel color, style, and transparency
Note
It is recommended to use the Replay function of TradingView to backtest and observe how the channel adjusts itself when the trend changes, and to change the selected channel to understand the channel delay when the trend changes. For example, when an upward channel turns into a downward channel, the strongest trend calculated at this time is still the longest-lasting upward channel. Even if our algorithm has a weighted correlation with the recent trend, before it completely turns into a strong downward trend, the algorithm believes that the strongest channel is still this upward channel (the price has deviated from this upward channel, but has not turned into a downward channel)
The upper and lower sides of the channel are not suitable for placing stop losses, but are more suitable for placing take profits and entering the market, because according to the concept, the channel edges are not designed according to resistance and support. Pangolin is an L2 leading indicator, not an inert indicator that reflects facts like VolumeProfile. But the middle line can be considered as support or resistance or POC position, because it is the middle value of the oscillation fluctuation. It can be observed that the middle line usually blocks the price from rising and falling many times.
If the channel is not displayed, just pull the chart to the left. The channel is calculated from the last candle forward. If the first candle chart at the beginning of the channel is not loaded, the channel will not be displayed.
If you see that the channels are not parallel, it means that you have not turned on the Log mode of the chart.
