Daily Range Contraction Signals and Threshold Settings
Summary
This indicator compares the current daily price range with the prior day’s range and marks cases where the ratio falls below a user-set threshold. Its purpose is to identify unusually narrow daily ranges, which traders may use as a prompt to watch for a later expansion in volatility or a breakout. The description presents the indicator as a signal tool; it does not define a complete entry, exit, or risk management strategy.
Three settings control the threshold, whether narrow-range markers appear, and whether calculations use the current or previous bar. The document gives only the conditional rule that the range-contraction value must be below the threshold. It provides no formula for the ratio, historical results, market examples, or guidance for choosing a threshold. Current-bar calculations may change as the bar develops, while previous-bar calculations use completed data; the document does not discuss this distinction further.
Key ideas
- The indicator compares today’s range with yesterday’s range.
- It marks a narrow range when the contraction measure is below a configurable threshold.
- Users can choose whether to show narrow-range signals.
- Calculations can use either the current bar or the previous bar.
- The description provides no performance evidence or complete trading rules.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.