[blackcat] L1 Simple Dual Channel Breakout

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█ OVERVIEW
The script "[blackcat] L1 Simple Dual Channel Breakout" is an indicator designed to plot dual channel breakout bands and their long-term EMAs on a chart. It calculates short-term and long-term moving averages and deviations to establish upper, lower, and middle bands, which traders can use to identify potential breakout opportunities.

█ LOGICAL FRAMEWORK

Structure:
The script is structured into several main sections:
• Input Parameters: The script does not explicitly define input parameters for the user to adjust, but it uses default values for short_term_length (5) and long_term_length (181).
• Calculations: The calculate_dual_channel_breakout function performs the core calculations, including the blast condition, typical price, short-term and long-term moving averages, and dynamic moving averages.
• Plotting: The script plots the short-term bands (upper, lower, and middle) and their long-term EMAs. It also plots conditional line breaks when the short-term bands cross the long-term EMAs.

Flow of Data and Logic:
1 — The script starts by defining the calculate_dual_channel_breakout function.
2 — Inside the function, it calculates various moving averages and deviations based on the input prices and lengths.
3 — The function returns the calculated bands and EMAs.
4 — The script then calls this function with predefined lengths and plots the resulting bands and EMAs on the chart.
5 — Conditional plots are added to highlight breakouts when the short-term bands cross the long-term EMAs.

█ CUSTOM FUNCTIONS

The script defines one custom function:
• calculate_dual_channel_breakout(close_price, high_price, low_price, short_term_length, long_term_length): This function calculates the short-term and long-term bands and EMAs. It takes five parameters: close_price, high_price, low_price, short_term_length, and long_term_length. It returns an array containing the upper band, lower band, middle band, long-term upper EMA, long-term lower EMA, and long-term middle EMA.

█ KEY POINTS AND TECHNIQUES

• Typical Price Calculation: The script uses a modified typical price calculation (2 * close_price + high_price + low_price) / 4 instead of the standard (high_price + low_price + close_price) / 3.

• Short-term and Long-term Bands: The script calculates short-term bands using a simple moving average (SMA) of the typical price and long-term bands using a relative moving average (RMA) of the close price.

• Conditional Plotting: The script uses conditional plotting to highlight breakouts when the short-term bands cross the long-term EMAs, enhancing visual identification of trading signals.

• EMA for Long-term Trends: The use of Exponential Moving Averages (EMAs) for long-term bands helps in smoothing out short-term fluctuations and focusing on long-term trends.

█ EXTENDED KNOWLEDGE AND APPLICATIONS

• Modifications: Users can add input parameters to allow customization of short_term_length and long_term_length, making the indicator more flexible.

• Enhancements: The script could be extended to include alerts for breakout conditions, providing traders with real-time notifications.

• Alternative Bands: Users might experiment with different types of moving averages (e.g., WMA, HMA) for the short-term and long-term bands to see if they yield better results.

• Additional Indicators: Combining this indicator with other technical indicators (e.g., RSI, MACD) could provide a more comprehensive trading strategy.

• Backtesting: Users can backtest the strategy using Pine Script's strategy functions to evaluate its performance over historical data.