Bitcoin/Gold Fair Value [MarktQuant]

The Bitcoin/Gold Fair Value indicator is designed to assess Bitcoin's price relative to gold, providing traders with insights into potential overvaluation or undervaluation based on gold's price movements.

By calculating a "fair value" for Bitcoin adjusted by the rate of change (ROC) of gold prices, this indicator helps identify market trends and potential reversal points. It overlays Bitcoin's fair value on the chart, displays a fair value gap histogram, and includes Bollinger Bands with customizable color themes to highlight bullish, bearish, and neutral market conditions. Visual cues such as overbought/oversold signals and color-coded fills enhance its usability for traders seeking to align Bitcoin trades with gold's market dynamics.


Features

• Fair Value Calculation: Estimates Bitcoin's fair value by adjusting its price based on the rate of change of gold prices (XAUUSD).
  
• Fair Value Gap: A histogram showing the percentage difference between Bitcoin's current price and its calculated fair value, colored to reflect bullish (above fair value) or bearish (below fair value) conditions.
  
• Bollinger Bands: Three sets of Bollinger Bands (1, 2, and 3 standard deviations) around the fair value line, with customizable transparency for clarity.
  
• Overbought/Oversold Signals: Triangular markers indicate when Bitcoin's price crosses the outermost Bollinger Bands (3 standard deviations), signaling potential overbought (bearish) or oversold (bullish) conditions.
  

Inputs

1. Color Theme (Default: "Classic"): Select from five themes to customize the indicator's colors
   
2. Rate of Change Length (Default: 70): The period for calculating the ROC of gold prices, used to adjust Bitcoin's fair value.
   
3. Bollinger Bands Length (Default: 30): The period for the simple moving average and standard deviation calculations for the Bollinger Bands.
   

Plots

• Fair Value Line: A dashed orange line overlaid on the price chart, representing Bitcoin's calculated fair value based on gold's ROC.
  
• Fair Value Gap: A histogram showing the relative difference between Bitcoin's current price and its fair value, colored bullish (when price > fair value) or bearish (when price < fair value).
  
• Bollinger Bands: Three sets of upper and lower bands (1, 2, and 3 standard deviations) around the fair value line, with fills between the bands and the moving average to highlight zones of overextension or support.
  
• Overbought/Oversold Markers: Small triangles above (overbought) or below (oversold) the price bars when Bitcoin crosses the outermost Bollinger Bands, using theme-specific bullish/bearish colors.
  

How to Use
Setup: Add the indicator to a Bitcoin chart (e.g., BTCUSD or BTCUSDT) on TradingView.

Interpretation

• Fair Value Line: Compare Bitcoin’s price to the fair value line. Prices above the line suggest overvaluation; prices below suggest undervaluation.
  
• Fair Value Gap Histogram: Positive values (bullish color) indicate Bitcoin is trading above its fair value; negative values (bearish color) indicate it’s below.
  
• Bollinger Bands: Prices near or beyond the outer bands (especially the 3rd deviation) may signal overbought (bearish) or oversold (bullish) conditions.
  
• Signal Markers: Watch for triangles indicating potential reversal points when Bitcoin crosses the outermost bands.
  

Disclaimer:
The "Bitcoin/GOLD Fair Value [MarktQuant]" indicator is strictly an educational tool designed to provide insights into Bitcoin’s price relative to gold for informational purposes only. It is not financial advice, a recommendation, or an endorsement to buy, sell, or hold any asset, including Bitcoin or gold.