This study tries to highlight ranges as they are defined by TradingLatino TradingView user. The study uses median values. A range is defined as periods when the price does not move a lot.
Its default values are aimed at BTCUSDT pair and 4h timeframe.
HOW IT WORKS
For each of the bars a '5' median is calculated based on the 'highest of open and close' For each of the bars a '5' median is calculated based on the 'lowest of open and close'
Thanks to the desviation setting both medians have a tolerated maximum and a minimum
Condition 1: The bar current 'highest of open and close' needs to be between the respective tolerated maximum and minimum
Condition 2: The bar current 'lowest of open and close' needs to be between the respective tolerated maximum and minimum
If both conditions are met then the bar is in a range
SETTINGS Price range periods [5]: How many previous periods are used to calculate the medians
Price range maximum desviation (%) [0.6] ( > 0 ): Maximum positive desviation for range detection Price range minimum desviation (%) [0.6] ( > 0 ): Mininum negative desviation for range detection Desviations should be both of them a positive number
WARNING Despite the name indicator does not identify the entire range. It identifies when you realise you are inside a range. E.g. If a range length is 8 periods length this range indicator will highlight only the last 6 periods of the range.
USAGE If your strategy signals you an upwards trend then you might use this range detector to know when to exit your long position
Why?
Because most of the times the price is found to be in a range it goes down
FEEDBACK 1 My former attempt on calculating ranges felt too much over complex that is why I decided to implement it with medians. It should be easier to modify if I want to desviation inputs to be calculated automatically in the future.
I'm interested on different approaches on how to detect ranges.
FEEDBACK 2 I have only used this identifier in BTCUSDT 4h timeframe. Feel free to comment down below with your suggested settings for your favourite pair and timeframe
PINE SCRIPT TRICK This script simulates looping an string char by char in pine script.
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