Noise Area Indicator with Gap Adjustments

May 13

This version of the Noise Area Pine Script, developed with the assistance of ChatGPT, includes adjustments for opening gaps to better account for overnight price changes that affect the market open. This Pine Script is designed to provide traders with a dynamic visualization of the Noise Area based on the volatility of the last 14 trading days. It calculates the upper and lower boundaries using the daily opening price, representing typical price movements relative to the open. This helps identify significant deviations, potentially indicating the start of a trend.

Features:

• Captures and adjusts for gaps between the previous day's close and the current day's open, allowing for more precise trend analysis.
  
• Sets the Noise Area boundaries using both the daily opening price and the previous day's closing price, ensuring that sudden market moves are adequately considered.
  
• Measures deviations in price from the opening, averaged over the last 14 days to calculate absolute movements.
  
• Plots upper and lower boundaries on the chart, providing a visual guide for traders to assess market volatility.
  
• Includes a dynamically plotted daily opening price, serving as a consistent reference point for market open conditions.
  

Usage:

This indicator is particularly useful for day traders and short-term traders who need to understand intraday volatility and pinpoint potential breakout points, aiding in the strategic planning of entry and exit points based on historical volatility patterns relative to the daily open (with gap adjustments).