GlossaryZ-Score Probability Waves
Z-Score Probability Waves
Bands from ±1σ to ±5σ around the moving mean of the close, plus rings at the strongest swings in the history. The bands are not fixed price levels: they breathe with volatility, so the same move is a 3σ event in a calm market and barely a deviation in a hectic one. On both sides, extremes count as exhaustion, not as a directional signal.
How to read it
- At the mean (below 1σ): normal fluctuation, no signal.
- Between 2σ and 3σ: The price has run far relative to recent volatility. That points to exhaustion, but does not announce a reversal.
- Above 3σ: rare and usually brief. A return toward the mean often follows, either through the price or through the bands widening.
- Narrow bands: Volatility is low. Even small moves then reach high sigma values.
In a strong trend, the price often runs along the 2σ band for a long time. An extreme is then an expression of strength, not a sell signal.
Good to know
- Rings are retrospective: The selection looks at the entire loaded history and takes the strongest swings first. If a stronger extreme appears nearby or the chart loads more history, a ring can disappear or move elsewhere. Rings are markers, not real-time signals.
- Timeframe: On daily candles, the 20-candle window spans just under three weeks and the bands sit close to the price. On 4D candles it is 80 days, and the bands open into zones that can be read across a cycle.