Introduction
The "Equanim" indicator is a versatile tool designed for traders and analysts on the TradingView platform. It utilizes Z-scores to help identify market trends and potential overbought or oversold conditions. By providing clear signals through crossovers and extreme Z-score values, this indicator aims to enhance traders' ability to make informed decisions in various market environments. Whether used for trend following or spotting potential reversal points, "Equanim | Opus" offers valuable insights into market dynamics.

Key Features   

• Dual Z-Score Calculation:The indicator computes both a raw Z-score and a smoothed Z-score, allowing users to analyze both immediate market deviations and longer-term trends.

• Trend Identification:Users can identify potential trend changes or continuations through crossovers of the zero line and between the raw and smoothed Z-scores.

• Overbought/Oversold Detection:Extreme Z-score values can indicate when the market may be overextended, potentially signaling reversal opportunities.

• Customizable Visualization:While the focus is on functionality, the indicator also offers various color themes to suit user preferences, ensuring a comfortable and intuitive experience.

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How it Works 

The "Equanim" indicator calculates a raw Z-score (z1) by averaging two Z-score functions and then computes a smoothed Z-score (z2) using a 10-period simple moving average of a scaled version of z1. These calculations provide the foundation for identifying trends and overbought/oversold conditions.

Trend Identification:

• Zero Line Crossover: When the raw Z-score crosses above the zero line, it may indicate the start of an uptrend. Conversely, a cross below the zero line could signal the beginning of a downtrend.

• Z-Score Crossover: When the raw Z-score crosses above the smoothed Z-score, it might suggest strengthening momentum in the current trend. A cross below the smoothed Z-score could indicate weakening momentum or a potential trend reversal.
   

Overbought/Oversold Conditions:

• Overbought: High positive values of the Z-score (e.g., above 1.8) may indicate overbought conditions, suggesting a potential pullback or reversal.

• Oversold: Low negative values (e.g., below -1.5) could signal oversold conditions, potentially leading to a bounce or reversal.
   

The indicator includes plots and filled areas that provide visual cues to these conditions:

A horizontal zero line serves as a reference for identifying positive or negative deviations.
The raw Z-score plot changes color based on its value, highlighting different market states.
The smoothed Z-score plot uses a color gradient to indicate the strength and direction of the trend.
Filled areas between the plots and the zero line visually represent the magnitude and direction of deviations, aiding in quick interpretation.
These visual elements work together to offer users a clear and intuitive way to interpret market conditions and potential trading signals.

Conclusion​
The "Equanim" indicator offers traders a powerful tool for identifying trends and potential reversal points through its innovative use of Z-scores. By combining raw and smoothed Z-scores, it provides insights into both short-term market movements and longer-term trends. Whether used for trend following or identifying overbought/oversold conditions, this indicator can be a valuable addition to any trader's toolkit, enhancing their ability to make informed and confident trading decisions.

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Disclaimer

​This indicator is provided for informational and educational purposes only and should not be considered as financial advice. Users should conduct their own research and analysis before making any trading decisions. The creator of this indicator is not responsible for any financial losses or gains that may result from its use.