Indicator Overview

The Volatility Envelope indicator evaluates Bitcoin’s price dispersion by calculating dynamic standard deviation bands around a central moving average (SMA or EMA). It creates three nested envelopes (±1, ±2, ±3 standard deviations) and normalises volatility via a squeeze oscillator. This setup provides a clear visualisation of price extremes and market compression, highlighting periods of low volatility (price coiling) and high volatility (expansion phases). The log-scale option allows traders to account for exponential price growth, making the indicator adaptive across different market regimes. By combining envelope bands with a normalised oscillator, it gives both structural and intensity-based insights into Bitcoin’s price movements.

How To Use

The indicator’s envelopes outline potential support and resistance ranges: the ±1 SD band shows the core trading range, ±2 SD represents extended price action, and ±3 SD captures extreme price deviations. The Squeeze Oscillator (0–100%) signals volatility strength: values below 20% indicate “Coiled Spring” conditions, suggesting consolidation and potential upcoming breakouts, while readings above 80% show “Volatility Expansion,” where price moves aggressively. Traders can use the oscillator to time entries and exits, positioning during low-intensity coiling phases and exercising caution during high-intensity expansions. The green gradient bands visually emphasise volatility intensity, helping investors anticipate shifts in Bitcoin’s cyclical volatility patterns.