Estimating Conditional Breakout Extension Probabilities

Summary

The indicator estimates how often a bar extends beyond the preceding bar’s high or low by several percentage-based distances. It keeps separate historical counts depending on whether the preceding candle was bullish or bearish, then displays the matching empirical frequencies as a ladder of projected levels above and below the previous range. The spacing is configurable, and zero-probability levels can be hidden.

The ladder is intended as descriptive context for typical range extension, possible targets, stop placement, or directional asymmetry. Its probabilities are frequencies in the loaded history, not forecasts, and the document advises reading the levels as a decay profile rather than fixed price objectives. Estimates depend on sample size, instrument, timeframe, and regime stability; the text provides no out-of-sample validation or evidence that trading from these levels is profitable.

Key ideas

• The tool counts extensions beyond the prior bar’s high and low at percentage-spaced distances.
• It conditions the historical frequencies on whether the prior candle was bullish or bearish.
• Displayed probabilities describe observed frequencies in the loaded history rather than guaranteed future outcomes.
• The shape and asymmetry of the level ladder can summarize typical extension behavior and possible directional bias.
• Sample size and changing market regimes limit how reliably historical frequencies may apply.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.