If you're looking to sharpen your trading edge, understanding daily range projections can be a game-changer. This handy indicator forecasts the high and low price values of a financial asset by taking into account the parameters of yesterday's completed candlesticks and today's activity.
So how does it work? Tomorrow's price range (let's call it X) is influenced by the relationship between today's close and open prices.
There are three scenarios to consider:
if Close[0] < Open[0], then X = (High[1] + Low[1] + Close[1] + Low[1]) / 2;
if Close[0] > Open[0], then X = (High[1] + Low[1] + Close[1] + High[1]) / 2;
if Close[0] = Open[0], then X = (High[1] + Low[1] + Close[1] + Close[1]) / 2.
Here’s what each term means:
- Open[0], High[0], Low[0], Close[0] - These refer to the current day's prices;
- Open[1], High[1], Low[1], Close[1] - These are yesterday's prices.
Based on these calculations, you can anticipate tomorrow's low price as Min = X - High[1]. Conversely, the anticipated high price is Max = Low[1] - X.
This indicator draws inspiration from the book "Forex from the First Person: For Beginners and Professionals" by A. Vedikhin, G. Petrov, and B. Shylov.
Comments 0