Valuation Z-Score

Valuation Z-Score

The "Valuation Z-Score" indicator is a custom Pine Script designed to assess the valuation of an asset, such as Bitcoin, by calculating a composite Z-Score based on multiple technical indicators and risk-adjusted performance metrics. It provides a visual representation of overbought and oversold conditions using a color-graded histogram and a short length smoothed moving average (SMA).

Key Features:
Z-Score Calculation:

• Combines Z-Scores from indicators like RSI, MACD, Bollinger Bands, TSI, ROC, Momentum, CCI, Chande Momentum Oscillator, and additional metrics (Sharpe Ratio, Sortino Ratio, Omega Ratio) over customizable lookback periods.
  

Customizable Inputs:

• Z-Score Lookback and Technical Valuation Lookback for Z-Score calculations.
  

• Metrics Calc Lookback periods for risk-adjusted performance ratios.
  

• Adjustable Upper and Lower Z-Score Thresholds (default ±2.0).
  

• SMA Length and color bar toggle for plot customization.
  

Visualization:

• A histogram displays the total Z-Score with a 5-color gradient (cyan for oversold, magenta for overbought) and dynamic transparency based on proximity to thresholds.
  

• An SMA line/area overlays the histogram for trend smoothing.
  

• Threshold lines (upper and lower) with adaptive transparency.
  

• A label shows the current Z-Score value.
  

• Optional background bar coloring based on SMA.
  

Usage:

• The indicator helps identify potential overbought (above upper threshold) or oversold (below lower threshold) conditions.
  

• The color gradient and SMA provide visual cues for trend strength and reversals.
  

• Ideal for traders analyzing asset valuation over any timeframe.