Standard Error Bands

Standard Error Bands are a type of envelope. They look similar to Bollinger Bands, however the calculation and interpretation is different. The middle band is a Least Squares Moving Average. The high band is the middle band plus a factor times the n period standard error. The low band is the middle band minus a factor times the n period standard error.

When the bands are close together, it means that there is a low standard error, which means that the price is in a trend. When the bands are farther apart, then the price is not trending. When the price is in a trend and the bands are close together, look for the bands to widen to signal the end of the trend.

Standard Error Bands were developed by Jon Anderson.

Formula:




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